On Accounting Fraud of Daekuk

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On March 28, 2012, The Financial Supervisory Service’s audit revealed that Daekuk has committed accounting frauds for the year 2009 in the amount of 23.7 billion won by understating the allowance for non-performing loans. Gaul accounting firm, auditor of Daekuk was found to have failed to audit properly for the allowance.

Based on the findings, FSS imposed various penalties on Daekuk as well as Gaul accounting firm. Daekuk was delisted from the exchange on April 13, 2012.

Investors who purchased stocks of Daekuk relying on the mis-represented annual reports and audit reports and suffered loss raised this suit against Daekuk and ex-CEO based on the accounting frauds and against Gaul accounting firm based on the audit failure.

This case was finalized at first trial: civil execution completed against the accounting firm, favorable ruling (100% admission of all claimed amount) against former CEO and related parties.