"Sudden Blow from the New Year" Ostem Implant, Dongjin Semichem, Kakao Pay 'Retail Investors' Outraged

Osstem Implant, Employee Embezzlement Amounting to 221.5 Billion Won
Investigation into Unfair Trading of Dongjin Semichem Stocks
'Muk-Twi Controversy' Ryu Young-jun, Kakao Co-CEO Nominee, Voluntarily Resigns
Individual Investors "Really Stressed Every Day..." Frustrated

Lee Mo (45), an employee of Osstem Implant accused of embezzling tens of billions of company funds. The photo shows Lee Mo entering the Gangseo Police Station in Seoul on the morning of the 6th.
[Image source=Yonhap News]

[Asia Economy Reporter Han Seung-gon] "How can such a thing happen..." , "I can't focus on work at all."

Individual investors (retail investors) are venting their frustration from the very beginning of the new year. While profits or losses in the stock market are common, they are experiencing investment losses due to various incidents such as embezzlement. Additionally, there is management risk embroiled in moral controversy. Retail investors are expressing their anger with comments like "How on earth do they think about shareholders to do such things?" and "We really never expected this."

Immediately, trading of Osstem Implant, an implant company, was suspended following an embezzlement case involving billions of won. It was also revealed that an employee accused of embezzlement traded a large volume of Dongjin Semichem stocks with the embezzled funds. Among shareholders holding related stocks, complaints like "We got hit by a bomb" continue. In the case of Kakao Pay, the stock price is fluctuating due to management risk.

[Image source=Yonhap News]

◆ "What good is lifting the trading suspension!" Osstem Implant retail investors hit by a thunderbolt

Individual investors of Osstem Implant are losing sleep day after day. Their funds are frozen due to the trading suspension, and even if trading resumes, concerns are growing that a stock price drop may be unavoidable.

Employee Lee (45, detained) of Osstem Implant is accused of embezzling 221.5 billion won of company funds. According to the electronic disclosure system on the 10th, Osstem Implant corrected the embezzled amount from the previous 188 billion won to 221.5 billion won. Accordingly, the proportion of the embezzled amount relative to Osstem Implant’s equity capital (as of the end of 2020) increased from 91.81% to 108.18%.

The company explained in a disclosure, "The initially disclosed embezzlement amount of 188 billion won was calculated based on the amount of damage incurred, and the corrected embezzlement amount of 221.5 billion won includes the amount returned by the accused (fund management employee Lee) after embezzlement."

Given this situation, pessimistic forecasts continue that even if trading resumes, a stock price decline cannot be avoided. This is because the embezzled amount reaches 108.18% of the company’s equity capital and may be reflected as a non-operating loss. The risk of poor management is also a source of anxiety for individual investors.

According to the Korea Securities Depository, as of the end of last year, Osstem Implant had 19,856 small shareholders holding 55.57% of the total shares. Just before the trading suspension, the company’s market capitalization was 2.0386 trillion won, ranking 19th among KOSDAQ-listed companies.

Investors are feeling resentful. Kim, a company employee in his 30s and an individual investor, said, "The trading suspension has stopped the circulation of funds," adding, "I really feel stressed every day." He raised his voice, saying, "If they truly cared about shareholders, they wouldn’t have committed such embezzlement or crimes."

Shareholders are preparing legal action. On the 6th, law firm Hannuri stated, "Even if Osstem Implant recovers a significant portion of the embezzled amount, it will be difficult for small shareholders to recover damages due to the stock price decline," and added, "We will recruit small shareholders to participate in damage relief."

◆ "I just sigh..." Dongjin Semichem hit by embezzlement fallout

Lee is also known to have invested in stocks using 55 billion won of embezzled funds before purchasing 39.2 million shares worth 143 billion won of Dongjin Semichem in October last year. Since this fact became known, Dongjin Semichem’s stock price has been falling daily since the embezzlement scandal at Osstem Implant broke out on the 3rd.

Previously, on October 1 last year, Lee purchased 3,917,431 shares (7.62%) of Dongjin Semichem on the market at 36,492 won per share, worth 143 billion won. From November to December, he sold all 3,367,431 shares (6.55%) at prices ranging from about 31,000 won to 34,000 won per share, reportedly incurring a loss of about 111.2 billion won. The Korea Exchange is currently investigating whether the large volume trading of Dongjin Semichem shares involved unfair trading.

Dongjin Semichem shareholders are bewildered. Park, a company employee in his 30s holding these shares, said, "The stock has been continuously declining. It’s really frustrating," adding, "It was a stock that had established a position in the semiconductor-related field." He continued, "In the related stock discussion forums, complaints continue almost daily," expressing his anger.

On November 3rd last year, officials attending the commemorative ceremony for KakaoPay's new listing on the KOSPI at the Korea Exchange in Yeouido, Seoul, are taking a group photo.
[Image source=Yonhap News]

◆ "We apologize to everyone" Kakao Pay 'eat-and-run' controversy

Investors who invested in Kakao Pay are facing a similar situation. Ryu Young-jun, the co-CEO nominee of Kakao, who was embroiled in the 'eat-and-run' controversy over Kakao Pay stocks, announced on the 10th that he would voluntarily resign. Kakao announced through a disclosure on the same day, "Ryu Young-jun, who was nominated as the new co-CEO of the company on November 25, 2021, expressed his intention to voluntarily resign as of January 10, 2022."

Earlier, Ryu and seven other executives sold 440,993 Kakao Pay shares acquired through stock options in a block deal (large volume off-hours trade) on December 10 last year, sparking the 'eat-and-run' controversy. On the 4th, Ryu apologized at a briefing, saying, "We apologize to everyone who felt uncomfortable due to the executives exercising and selling stock options," and added, "This has been an opportunity to reconsider the weight and responsibility that should be borne as executives of a listed company, and we will do our best to enhance shareholder value going forward."

However, market reaction was cold. On the 9th of last month, the day before the executives sold a large volume of shares, Kakao Pay’s stock price was 208,500 won, but on the 7th, the closing price was 153,500 won, a drop of about 26% in one month.

Kakao emphasized, "After carefully considering the opinions received from the crew through various channels recently, we decided to accept this decision," and added, "We will do our best to enhance shareholder value and restore trust among employees going forward."

This content was produced with the assistance of AI translation services.