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AeroSpace Technology of Korea Inc. Fined Record-Breaking Amount for Accounting Fraud, Avoids Delisting Review

알파경제  / 2025-07-14 05:24:13

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[alpha biz= paul lee] seoul, july 13, 2025 ? south korea’s securities and futures commission (sfc) under the financial services commission (fsc) has issued record-high individual fines and filed criminal charges against former executives of aerospace technology of korea inc.?a kosdaq-listed aerospace parts manufacturer?for intentionally falsifying financial statements.

at an emergency meeting held on july 11, the sfc found that aerospace technology’s senior management had violated accounting standards and disclosed false financial results. the sfc imposed fines totaling krw 1.02 billion on the former ceo?the highest individual fine since the external audit act came into force in 2017?and additional penalties on former executives:

former cfo: krw 360 million

former disclosure officer: krw 720 million

former auditor: krw 120 million

former strategy officer: krw 20 million

the company received a 12-month restriction on securities issuance and a 3-year mandatory auditor designation, while four former executives and the company itself were referred to prosecutors.

despite the severity of the misconduct, the sfc opted not to suspend trading or initiate a delisting review, citing the companys swift efforts to stabilize operations?including complete changes in management and shareholding, external audits, and restatements?as justification for exemption under the “no listing management required” rule.

the former majority shareholder was replaced by uamco, and the new leadership promptly conducted inventory audits and corrected financial disclosures. the company returned to profitability in q1 2025?the first quarterly profit since 2019.

additionally, the sfc took disciplinary action against the external audit firms samhwa, shinhwa, and daejoo, along with responsible cpas, for negligence in audit procedures.

in a separate action, the sfc also imposed a krw 1.54 billion fine on soop co. (formerly afreecatv) for similar financial misreporting, pending final approval by the fsc.

the sfc emphasized:

“former executives knowingly withheld false disclosures for an extended period, exacerbating investor losses for personal gain.”

this marks the inaugural use of the “no listing management required” exemption?introduced in june 2024?to support companies undertaking genuine restructuring efforts without unduly penalizing innocent small shareholders.