South Korea’s financial regulator plans to ask prosecutors to investigate the chief executive officer of Celltrion Inc. over alleged stock price manipulation, the drug manufacturer said.
The Financial Services Commission is asking prosecutors to probe the actions of Celltrion’s largest shareholder, the company said in an e-mailed statement yesterday. Celltrion disagrees with the FSC’s decision and plans to cooperate with prosecutors, the company said. Celltrion’s largest shareholder is CEO Seo Jung Jin, spokesman Kim Joon Seok confirmed by phone.
The FSC said earlier yesterday that the CEO of a Kosdaq-listed company manipulated the company’s share price three times since 2011 for fundraising and to prevent stock declines, identifying the company only with the letter “C.” The probe order comes after South Korean President Park Geun Hye instructed her aides in March to prepare stricter measures against stock manipulation, prompting financial regulators to submit bills to parliament to intensify penalties and enable quicker investigation of suspected market manipulation activity.
“Swings were big every time company chiefs made comments, so it was about time for a crackdown on this,” Heo Pil Seok, chief executive officer of Midas International Asset Management Ltd. in Seoul, said by phone. “While this may hamper investor sentiment in the short term, I see this as a faster way to more transparent business practices.”
Shares of Celltrion rose the most in a month in Seoul yesterday, closing 5.6 percent higher at 46,150 won and paring this year’s loss to 12 percent. The Kosdaq index, where Celltrion is listed, has advanced 6.6 percent during the same period. The FSC issued its statement after the close of trading. South Korean markets were closed today for a holiday.
Celltrion last month issued a statement denying using internal information to make a profit, without specifying whether the statement referred to the company or Seo.
Incheon-based Celltrion makes and sells biosimilar products and also manufactures medicine on a contract basis, according to the company’s website. The company won European backing in June to sell a copy of Johnson & Johnson’s Remicade, a $6 billion arthritis therapy.
Temasek Holdings Pte, Singapore’s state-owned investment company, is the second-biggest shareholder of Celltrion with a 14.9 percent holding as of June via its Ion Investments BV unit, according to a Celltrion regulatory filing on July 1.