Former executives of KH Philux, accused of fabricating a new bio-business venture to inflate stock prices and subsequently selling shares to secure illicit profits worth 6.3 billion Korean won, were acquitted of all charges in the first trial.
The 15th Criminal Division of the Seoul Southern District Court (Judge Yang Hwan-seung) on the 23rd acquitted former KH Philux vice chairman A, another former vice chairman B, and former representative C, who were charged with violating the Capital Markets Act.
The court stated, “While KH Philux’s actions may constitute fraudulent unfair trading prohibited by the Capital Markets Act, there is insufficient evidence to prove that the defendants conspired or were involved.”
A and others stand accused of spreading false information from February to September 2018, such as claiming investments from a U.S. bio-company and joint development of cancer treatments, to inflate stock prices and subsequently gain illicit profits of 6.31 billion Korean won. They were found to have distributed false press releases after acquiring the company in 2016 with no capital and sold shares held under borrowed names once the stock price surged. At the time, KH Philux’s stock price rose nearly eightfold, from 3,480 Korean won to 27,150 Korean won.
The court also mentioned KH Group Chairman Bae Sang-yoon, who has been overseas for three years while under investigation for alleged illegal remittances to North Korea. The court explained, “This case was prosecuted without any investigation into Bae Sang-yoon, who appears to have led the fraudulent unfair trading, as he fled abroad. Based on the evidence submitted by the prosecution at this stage, we had no choice but to reach this conclusion.”
