Certification of a securities class action against GS E&C, was affirmed in the Supreme Court of Korea on June 10, 2016, where investors of GS E&C, seeks compensation for their losses resulted from alleged accounting frauds by GS E&C,. (Case number: Supreme Court 2016ma253)
This marks the fourth case of a class action being certified finally and conclusively since the Securities-Related Class Action Act was introduced in 2005 in Korea. (the 1st one being the Jinsung T.E.C case, the 2nd one being the Royal Bank of Canada case and the 3rd one being Rich Dad 289th ELS case; except the Jinsung T.E.C case, the other two cases were lead by Hannuri Law )
The certification was finalized as the Supreme Court dismissed the certiorari petition filed by GS E&C upholding the certification decision of the Seoul High Court dated on January 29, 2016. Similar to the lower courts, the Supreme Court also found out that this case met the requirements of class action and plaintiffs showed the probability of
As the certification was affirmed in the Supreme Court, the lead plaintiffs should deposit the cost of lawsuit in the amount of 70 million won within 20 days after the decision date, and notice will be given to the members of the class through news papers and mails, who suffered losses by investing in GS E&C from April 1, 2013 to April 10, 2013. As Korea adopted an opt-out system in the Securities-Related Class Action Act, all victims who will have received notice will get recovered together except for ones who opt out of the case.
This case is related with the preliminary performance disclosure of GS E&C dated April 10, 2013. By the 2012 annual report dated March 29, 2013, GS E&C announced its operating profits and net profits to be 160.4 billion won and 108.4 billion won, respectively; however, just 12 days after the disclosure, GS E&C announced its expected losses for 1Q of 2013 to be 535.4 billionwon (operating profits) and 386 billion won (net profits) thus shocking the market. This is a confession of accounting fraud disguised with an ‘earing shock’.
By this certification, about 10,000 investors who suffered losses by investing in GS E&C are likely to be recovered. In the certification stage, the number of victims amounted to 10,399 and the potential losses were up to 46.5 billion won.