"Edison EV Major Shareholder Sale Alone Difficult to Punish"…Key Is Securing Evidence of Nominee Accounts and Collusive Trading

[Asia Economy Reporter Lee Seon-ae] Suspicious rumors continue to surround EdisonEV, the funding channel of Edison Motors, whose acquisition of Ssangyong Motor fell through. Amid the crisis of delisting due to a 'disclaimer of opinion' in the audit report, financial authorities are also investigating allegations of stock price manipulation related to the disposal of shares by major shareholders. Since simply selling shares cannot be punished, a focused investigation is expected to determine whether the purpose of entering the Ssangyong Motor acquisition battle was originally not to acquire the company but to seek stock price gains.

According to financial authorities on the 2nd, the Korea Exchange is currently examining whether there was any unfair trading related to the disposal of shares by EdisonEV's major shareholders. They plan to determine any legal violations through trading patterns and disclosure information, and if any allegations are found, proceed with established procedures such as notifying the Financial Services Commission.

There have been continuous rumors about EdisonEV in the market. Many suspicions arose that despite lacking acquisition capability, they entered the acquisition battle aiming for stock price gains. In particular, there were many criticisms about the unclear method of raising funds to buy a company more than ten times larger. Before acquiring Ssangyong Motor, Edison Motors acquired a 20% stake in EdisonEV through a third-party allotment capital increase. In this process, five investment associations?DMH, SLH, Nomad Ivy, I'm Holdings, and Starlight?divided a 35% stake. After EdisonEV's stock price soared from the 1,500 won range to 10,000 won on the back of Ssangyong Motor's positive news, the investment associations sold their shares and exited. The industry views this capital as having been used for Ssangyong Motor's down payment.

In fact, EdisonEV's stock price remained in the 1,500 won range as recently as May last year, then surged 55-fold to 82,400 won on November 12 last year. During this period, EdisonEV's major shareholders sold most of their shares and realized profits, sparking so-called 'eat-and-run' controversies.

The combined stake of the five investment associations dropped from 34.8% at the end of May to 11.0% in early August. DMH's EdisonEV holdings fell from 9.5% on May 30 last year to just 0.96% by July 9, about a month later. During this period, I'm Holdings disposed of its entire 5.49% stake.

They secured up to a 38% stake in EdisonEV, reportedly buying shares at 1,500 to 3,000 won per share and selling all of them by the end of the year. After the stock price surged above 10,000 won starting in June, a month after the purchase, they concentrated sales on 23.8%, two-thirds of their total stake, over three months until August. Subsequently, EdisonEV's stock price repeatedly declined, falling to 6,002 won on September 8 last year.

Accordingly, the Korea Exchange reportedly monitored EdisonEV closely from the beginning of the year, investigating whether the major shareholder investment associations engaged in unfair trading such as using undisclosed information or market manipulation during the stock price fluctuations.

However, simply selling shares by major shareholders cannot be punished. Therefore, financial authorities plan to actively examine nominee accounts, collusive trading, and false acquisitions. Legal sanctions are possible only if there is concrete evidence of artificially inflating the stock price.

Meanwhile, the KOSDAQ Market Headquarters of the Korea Exchange announced on the 30th of last month that EdisonEV's audit report submitted on the previous day (29th) contained a 'disclaimer of opinion due to uncertainty about the company's ability to continue as a going concern,' which constitutes grounds for delisting. As a result, trading of EdisonEV shares has been suspended.

The deadline for EdisonEV to submit the audit opinion is April 11, within 10 business days. Failure to submit the audit opinion will constitute a formal reason for delisting. Even if the opinion is submitted, if the audit opinion on the financial statements is adverse or a disclaimer, it will also constitute grounds for delisting.

Consequently, the damage has fallen squarely on individual investors. It is known that EdisonEV has about 104,600 minority shareholders, holding approximately 80.3% of the shares.

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