Samsung Biologics has won its appeal in the second trial of an administrative lawsuit, arguing that the first round of disciplinary measures imposed by financial authorities?including a recommendation for executive dismissal?over alleged accounting fraud were unjust.
On the 11th, the Seoul High Court's Administrative Division 6-3 (Presiding Judges Baek Seungyeop, Hwang Uidong, and Choi Hangseok) ruled in favor of Samsung Biologics in the second trial of a lawsuit filed against the Securities and Futures Commission, seeking to overturn the recommendation for executive dismissal and other related measures, upholding the decision of the first trial.
Previously, the Financial Supervisory Service determined that Samsung Biologics had engaged in intentional accounting fraud during the process in which the company, after recording losses since its establishment in 2011, posted a profit of 1.9 trillion won just before going public in 2015. The Securities and Futures Commission, which took over the case, concluded that Samsung Biologics had intentionally failed to disclose the granting of a call option on subsidiary Samsung Bioepis shares to the U.S. company Biogen. As a result, in July 2018, the commission imposed the 'first round of disciplinary measures,' which included a recommendation to dismiss the Chief Financial Officer (CFO), the appointment of an auditor, and a referral to the prosecution.
Subsequently, in November of the same year, the commission issued a 'second round of disciplinary measures,' which included ordering the restatement of financial statements, a recommendation to dismiss the Chief Executive Officer (CEO), and a fine of 8 billion won. Samsung Biologics filed separate administrative lawsuits against both the first and second rounds of disciplinary actions. The lawsuit in question pertains to the 'first round of disciplinary measures.'
The court of first instance ruled in favor of Samsung Biologics regarding the first round of measures. The court found that the first round of disciplinary actions by the Securities and Futures Commission was absorbed and merged into the subsequent second round of actions, and therefore no longer existed independently, making its cancellation appropriate.
Meanwhile, Samsung Biologics also won the first trial regarding the second round of disciplinary measures in August last year. The appeal for this case is currently ongoing at the Seoul High Court.
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