Three former executives of KH Philux, who were accused of spreading false disclosures to inflate stock prices and obtaining illicit gains worth over 60 billion won, were all acquitted in the first trial.
On December 23, the 15th Criminal Division of the Seoul Southern District Court (Presiding Judge Yang Hwansung) acquitted former Vice Chairman A of KH Philux, who had been indicted for violating the Capital Markets Act. Former Vice Chairman B and former CEO C, who were indicted on the same charges, were also found not guilty.
The court explained, "Considering the actual legal due diligence and valuation conducted, as well as the circumstances of capital investment and workforce reinforcement, it cannot be concluded that the bio business was pursued solely to boost the stock price."
The court also noted that there did not appear to be any specific discussions regarding the scale or terms of Philux's paid-in capital increase. While the related disclosure could potentially be considered a fraudulent unfair trade practice, the court determined that it was difficult to conclude that the defendants were directly involved in the disclosure.
The court further stated, "Baek Sangyun, Chairman of KH Group, who appears to have led the fraudulent unfair trading, fled overseas and could not be investigated at all before the indictment," adding, "At this stage, the only conclusion that can be reached is based on the claims and evidence submitted by the prosecution."
The defendants had been brought to trial on charges of spreading false information-such as claims that they had secured investment from an American bio company and agreed to jointly develop a cancer treatment-from February to September 2018, thereby inflating the stock price and obtaining illicit gains of 63.1 billion won.
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