The Securities and Futures Commission Sanctions 6 Companies Including MBN for 'Accounting Standards Violations'

The Securities and Futures Commission (SFC) under the Financial Services Commission announced on the 8th that it has decided on sanctions against six companies that violated accounting standards.

On this day, the SFC announced that it decided on sanctions against Maeil Broadcasting Network (MBN), Samhwa Electronics Industry, Dynamic Design, and others. Among them, MBN had previously been sanctioned by financial authorities in October 2019 for accounting fraud related to the illicit fulfillment of capital.

According to the SFC, MBN borrowed funds under the names of executives and employees from a bank through a disguised loan to secure the minimum capital required for the approval of a comprehensive programming channel, purchased company shares with these funds, but did not reflect this in the financial statements, thus preparing false documents. The SFC imposed fines on MBN and Maeil Business Newspaper and decided on measures equivalent to recommending the dismissal of the former responsible executives. Additionally, the SFC decided on audit work restrictions for the certified public accountant who neglected audit procedures related to MBN.

Furthermore, the SFC imposed a fine of 253.1 million KRW and designated an auditor for Samhwa Electronics Industry, a listed company on the Korea Exchange that violated accounting standards. The auditor, Daemyung Accounting Corporation, was ordered to additionally contribute 70% to the joint compensation fund and was subjected to audit work restrictions.

A fine was also decided for Shinheung, a listed company on the Korea Exchange, for overstating inventory assets. The amount of the fine will be finally determined by the Financial Services Commission, and the company will be subject to auditor designation for three years. The auditor, Samil Accounting Corporation, was also subject to a fine.

The SFC imposed a fine of 70.5 million KRW on Dynamic Design, a listed company on the Korea Exchange. It also decided on measures equivalent to recommending the dismissal of two former responsible executives. For Gold Pacific, a KOSDAQ-listed company, sanctions including a fine of 392.8 million KRW and a two-year auditor designation were decided due to false reporting of sales and cost of sales. The former CEO and two former responsible executives of Gold Pacific were recommended for dismissal and removal and were reported to the prosecution.

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