Suit for Damages in Relation with BND Co., Ltd. for its Window Dressing and Deficient Audit
BND Co., Ltd., KOSDAQ listing company, was under special supervision due to the impaired capital continuous ordinary loss in 2 years on December 2007. The company, in order to avoid delisting, increased its capital by employing an expedient: purchasing the shares of BDN Energy, a non-listed company, from Yoo Byung Jae, the largest shareholder of BND Energy, with the extraordinarily high price comparing to the reasonable price, and Yoo Byung Jae, in turn, participated in the increase of capital with the money. This security swap transaction (in fact) improved the financial structure of BND in appearance and allowed the company to avoid delisting as intended. Meanwhile, the financial authorities found out that the audits of BND were deficient in relation to the securities swap transaction, and BND got out of KOSDAQ on January 18, 2010. As such, Investors who purchased the securities of the company from March 21, 2008, when the audit report for the year of 2007 was issued, and to October 14, 2009, when the company’s wrongdoing was revealed, raised this complaint against the company, then-CEO of the company, and the auditors of the company for their damages.