[Anchor]

The Financial Supervisory Service (FSS) has launched a formal investigation into Samchundang Pharm, a company that was once a leading stock on the KOSDAQ but has since been embroiled in controversy over unfair disclosure practices. As the KOSDAQ marks its 30th anniversary, restoring market trust appears to be the top priority for revitalizing the exchange.

Reporter Kim Hye-min has the story.

[Reporter]

Samchundang Pharm became the top company on the KOSDAQ by market capitalization in March, with its stock price soaring to 1.23 million won per share.

However, following various controversies, the stock price plummeted, falling to the 200,000 won range in just over three months.

In February, Samchundang Pharm announced that it had signed a commercialization agreement for oral diabetes and obesity treatments with 11 European countries, and issued a press release claiming the contract was worth 5.3 trillion won.

The company subsequently announced an exclusive sales contract with the United States worth 15 trillion won. However, suspicions of false disclosure arose due to the failure to disclose the counterparty, an unusually high profit-sharing ratio of 90 percent, and low initial technology fees relative to the contract size.

At the time, the Korea Exchange designated the company as an unfaithful disclosure corporation and imposed penalty points. It has now been confirmed that the Financial Supervisory Service has also launched a formal investigation into the company.

The FSS is focusing on whether there were any violations of disclosure obligations, such as the inclusion of false information in the company's filings.

[Ahn Byung-jun / Lawyer: If it is revealed that the company intentionally included false information or omitted facts, it could face a fine of up to 2 billion won under the Capital Markets Act, or imprisonment of up to 5 years or a fine of up to 200 million won.]

A financial authority official stated, "The plunge in Samchundang's stock price has poured cold water on the government's policy to revitalize the KOSDAQ market."

The KOSDAQ market, which celebrated its 30th anniversary yesterday (July 1), has failed to surpass the 1,000-point mark it held at its inception, unlike the KOSPI which has surged this year, as it continues to be shunned by investors.

While the FSS is preparing measures to improve disclosures for pharmaceutical and biotech companies, the Korea Exchange has also begun efforts to restore market trust, including strengthening the delisting system for insolvent companies.

[Choi Ji-woo / Executive Director, KOSDAQ Market Division, Korea Exchange: We will strengthen the criteria for cumulative penalty points for unfaithful disclosures so that basic market discipline operates more strictly.]

Attention is now focused on whether the market, which has been stigmatized by the "KOSDAQ discount" due to insolvent companies and controversies over unfair trading, can regain the interest of investors.

(Video reporting: Jo Chang-hyun | Video editing: Won Hyung-hee | Design: Kim Ye-ji, Choi Ha-neul | VJ: Jeong Han-wook)