Celltrion stocks plunge on ‘CEO risk’

2014-02-05 16:34

Celltrion stocks plunge on ‘CEO risk’

By Kim Tae-jong

image001-2Stocks of Celltrion dropped by 6.14 percent Wednesday following news that its CEO has been banned from overseas travel and the prosecution will soon summon him for questioning over alleged stock price manipulation.
Celltrion is the largest firm on the tech-laden KOSDAQ bourse in terms of market capitalization, which stood at 4.07 trillion won as of Feb. 5.
It lost 2,650 won per share to end trading at 40,500 won, Tuesday, while the KOSDAQ dropped by 0.38 percent to close at 505.62.
The investigation into stock price rigging at Celltrion began in October after the Securities and Futures Commission filed a complaint against Chairman and CEO Seo Jung-jin for fraudulent equity trading.
The prosecution has already summoned officials from the firm and recently imposed a travel ban on the biopharmaceutical firm’s CEO and other executives.
“We have just started to summon relevant employees,” a prosecutor said, declining to comment further on the ongoing probe.
The prosecution has been very careful with its investigation, given the effect it could have on the KOSDAQ bourse.
It suspects that Seo manipulated the firm’s stock prices three times by using funds from Celltrion and its subsidiaries between 2011 and last year. He is also suspected to have used insider information.
Celltrion has continued to deny the allegations over the past few months.
Seo has defended himself by saying that he bought the firm’s stock in order to protect it from speculative short-selling.
He argued that the firm had been under attack from investors who deliberately distorted prices by spreading false information and gained profits through short-selling.
In April last year, before the probe began, Seo even said that he would sell his entire controlling stake in the firm to a multinational pharmaceutical company as he was tired of short-selling by speculative investors, also criticizing the lack of protection from the financial authorities.
Upon the announcement, the stock of the firm plunged to the lowest level of 25,914 won on April 22, but gradually gained to hit its highest, 66,706 won, during trading hours on Aug. 6. It has since moved around 40,000 won.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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