Financial Services Commission Imposes 1.4 Billion Won Accounting Fine on 'Stock Manipulation Special Probe' Target Wellbiotech

Wellbiotech, which is under investigation by the special prosecutor Kim Keonhee for alleged stock price manipulation, along with its former CEO and others, has been fined approximately 1.4 billion won for violations of accounting standards.

On December 17, the Financial Services Commission announced at its 22nd regular meeting that it had decided to impose a fine of 1,092.8 million won on Wellbiotech for preparing and disclosing financial statements in violation of accounting standards. Additionally, a total fine of 309.5 million won was imposed on three individuals, including the former CEO, former executive in charge, and former manager of the meat processing business.

Wellbiotech purchased existing privately placed convertible bonds from creditors and then sold them to a related party, Company A, and others at prices below market value. However, the company failed to reflect the resulting losses in its accounting records from 2019 to 2022. As of the end of 2022 on a consolidated basis, these losses amounted to 47.5% of the company’s equity capital. Wellbiotech also manipulated its accounting records by treating businesses operated by other companies as if they had been operated directly by Wellbiotech.

The Financial Services Commission also imposed a fine of 283.5 million won on Shinhan Accounting Corporation, Wellbiotech’s auditor, for negligence in its auditing duties.

At the same regular meeting, the commission also finalized the decision to impose fines on Dongsung FineTec for violating accounting standards. The company was fined 6.1 million won, and four individuals, including the CEO, were fined a total of 148.8 million won. Dongsung FineTec, a manufacturer of synthetic resins and plastic materials, was found to have inflated its net profit by manipulating the progress rates of construction contracts and other related figures.

Previously, the Securities and Futures Commission under the Financial Services Commission had decided to take actions such as filing complaints and designating auditors for Wellbiotech and Dongsung FineTec.