Executives of semiconductor design corporations FADU were indicted on the 18th on charges of inflating their estimated sales to enter the KOSDAQ market.
The Financial and Securities Crime Joint Investigation Division of the Seoul Southern District Prosecutors' Office (Director General Kim Jin-ho) said it indicted three executives of semiconductor design corporations FADU without detention on charges of violating the Financial Investment Services and Capital Markets Act, and also indicted the FADU corporation.
According to prosecutors, they are suspected of concealing the suspension of orders from key clients during the process of listing on the KOSDAQ in Aug. last year and inflating the offering price.
Prosecutors determined that FADU's executives, even after being notified by major clients of an order suspension, submitted false sales explanations to the Korea Exchange (KRX) to pass the preliminary listing review, and omitted the order suspension in the securities registration statement and prospectus while exaggerating the likelihood of sales from new clients.
Prosecutors also investigated allegations that, in the process of being selected as a partner company of SK hynix, FADU's CEO provided money and valuables under a borrowed name to an executive at SK hynix's Future Strategy Office.
Prosecutors, noting that FADU's executives concealed the order suspension from NH Investment & Securities, the listing underwriter, cleared related NH Securities officials of charges. However, prosecutors said the Financial Services Commission (FSC) should review imposing administrative sanctions, citing negligence in failing to prevent inadequate entries in FADU's securities registration statement and prospectus.
At the time of its KOSDAQ debut, FADU presented its own annual sales estimate of 120.2 billion won, but after listing, its sales for the second and third quarters were only 59 million won and 320 million won, respectively, sparking controversy over a "pumped-up listing."