Suit for Damages in relation with Sesil Co. for its Window Dressing and Deficient Audit
Sesil Co., Biological control company using natural enemies, was appointed as “Hidden Champion” by Korea Exchange and was known as a bluechip company. The company, however, was doing window dressing all through the year from 2008. In particular, the company increased its revenue falsely and got subsidy from the government by pretending it sold its products(natural enemies) to farmer while in fact it provided them with the products freely. The prosecutor’s office embarked on the investigation indicted Lee Won Kyu, president of the company, and Kim Hun Ki, CEO of the company, on charge of defraud of subsidy and false representation of financial statements. Due to the indictment and its auditor’s disclaimer of opinion, the company has to be delisted from KOSDAQ on Feb. 10, 2011. Lee Won Kyu and Kim Hun Ki were sentenced to two years of prison and one and a half years of prison, respectively. Accordingly, investors who purchased the securities of the company from March 4, 2009, when the audit report for the year of 2008 was issued, to Dec. 8, 2010, when the company’s wrongdoing was revealed, raised this complaint against the company, the management of the company, and Hanmi Accounting Co., auditor of the company for their damages.