Financial Supervisory Service to Prosecutor's Office of NH Investment & Securities Co., Ltd., Paddu and Host of 'Listing of Pudu'

Last year, officials from semiconductor design company Padu and listing organizer NH Investment & Securities, which caused controversy over the "loose listing," were handed over to the prosecution.

The Financial Supervisory Service's Capital Markets Special Judicial Police said it sent Paddu and NH Investment & Securities, the organizer of the IPO, to prosecutors on charges of violating the Capital Markets Act after concealing a sharp drop in sales and inflating their corporate value.

The investigation found that Padu executives were expected to see a sharp drop in sales from the end of 2022, but they hid it in February last year just before applying for a preliminary listing review and sold their holdings by attracting investment through advance financing.

In the process of submitting securities reports for preliminary listing review and fundraising from March to June last year, it was also investigated that the expected sales were calculated without reflecting the impact of a sharp decline in future sales caused by the suspension of orders from major clients.

Those involved in NH Investment & Securities were charged with conspiring with Padu in the process of calculating the public offering price based on the fact that the amount of sales larger than the expected amount recorded during the preliminary listing review was recorded in the securities report.

Padu entered the KOSDAQ market boasting a ransom of more than 1 trillion won when it was listed in August last year, but its stock price plunged 45% for three days after announcing a sharp drop in performance and has yet to recover its stock price before the performance announcement.

In the wake of this incident, the Financial Supervisory Service has been improving the disclosure and accounting system since last year, and has made internal standards and procedures to prevent the organizer from using excessive estimates when calculating public offering prices.