The Seoul Administrative Court has suspended the Financial Services Commission (FSC)’s disciplinary action against Samsung BioLogics for alleged accounting fraud on Tuesday.
The court accepted the company’s argument that enforcing the penalties before a formal court ruling can cause irrecoverable damage to the firm.
“It can be recognized that the disposal of FSC may cause damage to Samsung Bio that is difficult to recover in the future,” the court said in a ruling. “Therefore, there is an urgent need to suspend the disciplinary action’s effectiveness to prevent such events.”
The decision came after the financial regulator ruled that the company intentionally violated accounting rules ahead of its initial public offering in 2016 and demanded the company to fire its CEO and CFO while imposing fines of 8 billion won ($7.1 million) and requesting the firm to correct its balance sheet.
The biosimilar maker continuously stated that it had not breached any accounting rules. The company had also filed an administrative lawsuit to nullify the regulator’s findings and sought an injunction to stop any disciplinary actions of the FSC until the court ruled on the case.
Due to the court’s decision, the FSC’s disciplinary action will cease to be effective for 30 days from the outcome of the administrative lawsuit filed by Samsung BioLogics.
"It is fortunate that the court decided to suspend the FSC’s decision," Samsung BioLogics spokesperson said. "We will do our best to prove the legitimacy of accounting in the main lawsuit.”
The FSC reacted cautiously to court decisions.
“We will look at the details of the court's decision and immediately examine the countermeasures such as whether to appeal or not," an FSC official said. "Apart from the suspension, we will make every effort to prepare for the case."
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