A semiconductor design company and its executives, accused of inflating their performance outlook and concealing a sharp decline in sales prior to going public-thus raising suspicions of a so-called "overhyped IPO"-have been brought to trial.
On December 18, the Financial and Securities Crime Joint Investigation Unit of the Seoul Southern District Prosecutors' Office (headed by Chief Prosecutor Kim Jin-ho) announced that it had indicted Fabless Company A and three of its executives without detention on charges of violating the Capital Markets Act.
The company and its executives are accused of concealing a notice from a major client regarding the suspension of orders and submitting false sales explanation documents to the Korea Exchange in order to pass the preliminary listing review.
They are also alleged to have omitted the order suspension from their securities registration statement and investment prospectus, and to have exaggerated the potential for new client sales in order to inflate the offering price and solicit subscription funds.
Meanwhile, prosecutors have cleared employees of the securities firm that managed the company's IPO of any wrongdoing.
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