'221.5 Billion Embezzlement' Ostem Implant Minority Shareholders Lawsuit "First Hearing Not Scheduled Yet"

Lee Mo, who is accused of embezzling 221.5 billion won of company funds from Osstem Implant / Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Kim Daehyun] Minority shareholders of Ostem Implant, who experienced a large-scale embezzlement incident, continue to face delays in their class action lawsuit against company officials and accounting firms.

The lawsuit filed by the law firm Okims, representing 26 affected shareholders, was submitted in January, and about five months have passed, but the first hearing date has yet to be scheduled. Some defendants, including the accounting firm, have not even appointed lawyers and have not submitted proper responses.

The initial total claim amount was set at 273 million KRW. This was based on Article 170, Paragraph 2 of the Capital Markets Act, which stipulates the liability of auditors for damages, assuming the stock price would fall to 50% of the closing price of 142,700 KRW on December 30 last year, just before the trading suspension, which is 71,350 KRW.

On the 15th, Um Taeseop, a lawyer at Okims Law Firm, explained, "The stock price at the time the litigation concludes will be the basis for calculating the final claim amount. We plan to change the claim accordingly at that time." He added, "The difference in stock price can be considered direct damage in this case. Ultimately, since this incident occurred due to the failure of the internal financial transaction monitoring and control system, we will prove the causal relationship."

Kim Juyeon, a lawyer at Hannuri Law Firm preparing a class action for about 1,900 minority shareholders, plans to file a complaint after reviewing stock price fluctuations following the resumption of trading and setting the claim amount. Lawyer Kim stated, "We are considering filing the complaint after calculating the damages," and added, "We will notify the victims soon."

Typically, minority shareholder lawsuits also claim indirect damages such as emotional distress, but these are difficult to prove and the amounts recognized by courts tend to be small. Therefore, except for cases where shareholders have already sold all their stocks and the damage amount is confirmed, affected shareholders must monitor stock price trends until the end of the trial. However, the legal community expects the lawsuit to take about three years to reach a conclusion due to slow progress.

Previously, Ostem Implant's stock trading was suspended after news broke that the finance team leader, Mr. Lee (44), who is currently detained and on trial, embezzled 221.5 billion KRW of company funds. Trading resumed on April 28, about four months later. As of 9:01 AM on that day, Ostem Implant's stock price was 111,100 KRW, trading at about 78% of the price before the suspension. As of the end of last year, Ostem Implant's market capitalization was 2.0386 trillion KRW, and 42,964 minority shareholders held 62.2% (8,888,944 shares) of the issued stock.