[Yonhap News Photo]
SEOUL -- Samsung BioLogics launched a legal battle against a decision by financial regulators that the bio company affiliated with South Korea's largest Samsung Group violated accounting rules in 2015 to inflate profits ahead of its listing.
BioLogics said Wednesday that it has sent an application for administrative litigation and the suspension of execution to a court in Seoul, two weeks after the Securities and Futures Commission imposed a fine of eight billion won ($7.07 million) and recommended the sacking of its chief executive.
The commission asked prosecutors to open a criminal investigation, and South Korea's securities exchange suspended BioLogics to determine whether it should be delisted. BioLogics said the suspension of execution would minimize confusion among investors and prevent possible damage.
The commission said BioLogics suddenly changed a subsidiary into a related company, although it has no reason to change its judgment. BioLogics has denied any accounting fraud, insisting it adopted international standards through consultations with outside experts when it was listed on the local bourse in 2016. At that time, the company reported a net profit of 1.9 trillion won after staying in the red for four years.
Through its public offering, BioLogics raised some 2.25 trillion won, drawing widespread market attention because it's part of efforts by Samsung Electronics vice chairman Jay Y. Lee to realign the parent group's business portfolio.
In 2012, BioLogics set up Samsung Bioepis, a joint venture with U.S.-based pharmaceutical company Biogen. This month, the American partner increased its stake to one share short of 50 percent. Bioepis is known for Imraldi, an adalimumab biosimilar referencing Humira.
The dispute began in May when financial regulators disclosed information on their provisional decision that BioLogics breached accounting rules, leading to a fall in the share prices of BioLogics.
Bioepsis had been valued at market prices instead of its book value. By applying different accounting rules, its value surged from 290 billion won to 4.8 trillion won. BioLogics said a different accounting system was applied because the possibility of Biogen exercising its call option increased. In July, the Financial Services Commission, a powerful financial watchdog, ruled that BioLogics left out important information intentionally about a call option deal with Biogen.
