Last year, semiconductor design company Padu and officials from its underwriter, NH Investment & Securities, were handed over to prosecutors over controversy surrounding their 'inflated listing.'
The Financial Supervisory Service said it applied allegations of violating the Capital Markets Act against Padu, which concealed a sharp drop in sales and inflated its corporate value for listing, and officials from NH Investment & Securities, sending the case to prosecutors with a recommendation for indictment on the 22nd.
Padu was listed on the Korean Securities Dealers Automated Quotations (KOSDAQ) market in August last year, boasting a corporate value exceeding 1 trillion won. Even after the listing, its stock price rose, temporarily surpassing a market capitalization of 2 trillion won, but it plummeted by 45% over three days following the announcement of its earnings.
Initially, the estimated annual sales figure submitted by Padu in its securities filing reached 120.2 billion won. However, the actual sales confirmed after the earnings report were only 59 million won for the second quarter (April to June) and 320 million won for the third quarter (July to September).
The special investigation results revealed that Padu's management concealed the fact that a significant drop in sales was anticipated due to reduced and halted orders from key clients since the end of 2022, even while attracting pre-initial public offering investments just before applying for the preliminary review last February.
Moreover, during the process of submitting the securities filing for preliminary review and fundraising between March and June last year, Padu did not reflect the anticipated impact on future sales due to the suspension of orders from key clients.
An official from NH Investment & Securities is accused of recording a larger amount in the securities filing than the estimated sales amount stated during the preliminary review and of colluding with Padu in determining the public offering price based on that.
The FSS pointed out that 'this case undermines market confidence in companies preparing for or undergoing the listing process and raises investors' distrust in the future sales projections presented by companies.'