Former Sillajen CEO Moon Eun-sang sentenced to prison again in 2nd trial for 'unjust enrichment'... Fine significantly reduced

Moon Eun-sang, former CEO of SillaJen Photo by Yonhap News

[Asia Economy Reporter Kim Daehyun] Moon Eunsang, former CEO of SillaJen, who was indicted on charges of obtaining illegal profits through 'round-tripping' using a paper company, was sentenced to prison again in the appellate court. However, the fine was reduced by 34 billion KRW compared to the first trial.

On the morning of the 25th, the Criminal Division 1-1 of the Seoul High Court (Chief Judge Lee Seungryeon, Judges Eom Sangpil and Shim Dam) overturned the first trial sentence of 5 years imprisonment and a fine of 35 billion KRW against former CEO Moon, who was charged with violating the Capital Markets Act and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, and sentenced him to 5 years imprisonment and a fine of 1 billion KRW.

The appellate court stated the sentencing reasons, saying, "While being confident in the success potential of Pexaver (an immuno-oncology drug candidate developed by SillaJen), the defendant took considerable investment risks, and the issuance structure of the new share subscription warrants (BW) in this case was fully disclosed during the listing examination, so it cannot be said that SillaJen's listing was solely due to the defendant's violation of the Capital Markets Act. The investors' losses ultimately resulted from the clinical failure of Pexaver, and it is difficult to hold the defendant entirely responsible for the clinical failure."

The court acquitted Moon of some charges and estimated the damage caused to SillaJen by the round-tripping structure at 1.05 billion KRW. Furthermore, it ruled that the total face value of the BW or the disguised subscription payment of 35 billion KRW were not themselves the subject of the violation or means used to create an appearance, but could not be considered profits obtained from the violation.

Previously, former CEO Moon was prosecuted on charges of obtaining illegal profits by acquiring approximately 35 billion KRW worth of SillaJen BW through a 'round-tripping' method using a paper company. BW refers to bonds with warrants that grant the right to purchase the issuing company's shares at a predetermined price within a certain period after issuance.

The first trial sentenced Moon to 5 years imprisonment and a fine of 35 billion KRW. At that time, the court pointed out, "As the CEO of SillaJen, he led the issuance of BW through round-tripping, causing serious damage and confusion to SillaJen and the capital market," and "Furthermore, he obtained enormous profits through exercising the new share subscription rights."

It added, "Nevertheless, the defendant shifted responsibility to others throughout the trial process and failed to reach genuine reflection," and "There is a need for strict punishment of fraudulent unfair trading crimes." Moon, who had been on bail and tried without detention, was taken into custody in court following the prison sentence.

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