South Korea's financial watchdog on Tuesday announced its decision to lodge a complaint with the prosecution against the head of bio-pharmaceutical firm Celltrion Inc. for alleged stock-price rigging.
The Financial Services Commission (FSC) has been investigating whether Seo Jung-jin, president of Celltrion, was involved in suspected stock price manipulation with some investors in 2012 by using internal information to gain unfair profits.
Seo is suspected of scooping up shares of his company, the largest listed company on the junior KOSDAQ bourse, before the company announced its plans of share buybacks.
The FSC said it will lodge a complaint with the prosecution against Seo and two other former heads of Celltrion affiliates for alleged stock price rigging.
"The subject appeared to have tried to prevent the stock values from falling through price-rigging to keep the company afloat against growing criticism about its poor performance," it said in a statement.
It appeared that he also tried to preserve the stock values since he had taken out loans with the stocks as collateral, the regulator added.
The FSC found that Seo and the former executives engaged in the suspected stock price manipulation three times between 2011 and 2012.
Despite the FSC's decision, the bio-pharmaceutical company saw its share price surge 5.61 percent on Tuesday, closing at 46,150 won on the secondary bourse in Seoul.
Share prices of Celltrion have undergone high volatility since April when Seo said that he is looking for a buyer to take over all of his stakes in the company and its affiliates valued at around 1.3 billion won (US$1.21 million).
Following the announcement, its share prices tumbled around 46 percent to 26,650 won in few days. But the stock prices soared to the 60,000 won level in August on the news that it won European approval for a biosimilar version of Johnson & Johnson's rheumatoid arthritis drug Remicade.
When Seo unveiled the move to sell his stakes to a foreign company, he blamed speculative short-selling activities for his decision, claiming that his company had been heavily spending money on buying its own shares to stabilize its share prices.
The regulator investigated suspected short-selling moves at the request by Seo, but it has found no suspicious activities.
Celltrion, founded in 2002, counts Singapore's sovereign wealth fund Temasek Holdings Ltd. and Japan's Orix Corp. among its investors.