Executives of the listed company STX, who allegedly engineered a false appearance of selling an insolvent subsidiary at a high price to spread the misleading expectation that the company's finances would improve and to artificially prop up the stock price, have been reported to prosecutors.
The Securities and Futures Commission held a regular meeting on the 22nd and reported on the 23rd that it had filed a complaint with prosecutors against four people, including STX executives, on suspicion of violating the prohibition on unfair trading under the Financial Investment Services and Capital Markets Act.
According to the Securities and Futures Commission (SFC), STX decided to sell insolvent subsidiary STX Marine Service during the process of partitioning STX Green Logis through a spin-off and relisting it. It then created a false appearance that STX Green Holdings, a paper company with no business substance funded by STX's largest shareholder and affiliates, would acquire STX Marine Service. Even after the STX Marine Service sale transaction, STX continued to support the subsidiary's operating funds through debt payment guarantees and lending.
They also appeared to have intentionally omitted STX Marine Service's liability from the financial statements and consolidated financial statements, leading to an overvaluation of STX Marine Service's share value.
The Securities and Futures Commission (SFC) determined that "they sold the subsidiary at a high price to a third party unrelated to the parent company to make it look as if the financial structure had improved, and, by succeeding in the spin-off relisting, the stock price surged temporarily, leading to allegations that they took a large amount of unjust gains."
Authorities warned that "anyone who uses fraudulent means in connection with the trading of financial investment products or obtains unjust gains by making false statements or omissions of material facts may face criminal penalties for violating the Financial Investment Services and Capital Markets Act, including imprisonment of at least one year or a fine (up to six times the unjust gains)."