FSS Special Judicial Police raided Korea Exchange on the 27th regarding L&F's Tesla supply contract correction disclosure. The raid secured disclosure materials and review process documents submitted by L&F. The investigation focuses on L&F's massive supply contract correction disclosure that reduced a 3.8347 trillion won Tesla contract to 9.7306 million won on December 29 last year, two days before contract expiration, triggering a 9.85% stock price plunge the next day.
FSS Special Judicial Police Secured Documents from Korea Exchange
According to the financial investment industry, the Special Judicial Police secured disclosure materials submitted by L&F and documents related to the disclosure review process from Korea Exchange in Yeouido, Seoul on the morning of the 27th. Korea Exchange and its executives are not investigation targets. The raid was characterized as a reference investigation to verify facts related to L&F by securing materials held by the exchange.
L&F Reduced Tesla Contract from 3.8347 Trillion Won to 9.7306 Million Won
In February 2023, L&F disclosed a 3.8347 trillion won high-nickel cathode material supply contract with US electric vehicle company Tesla. On December 29 last year, two days before contract expiration and after market close, L&F reduced the contract size to 9.7306 million won, citing changed supply volume. The next day, L&F's stock price plunged 9.85% as sell-off volume poured in.
Investigation Examines Treasury Share Disposal Before Disclosure Correction
The Special Judicial Police is examining L&F's treasury share disposal process that preceded the correction disclosure. On December 2 last year, L&F disposed of 1 million treasury shares to overseas institutional investors, raising 128.1 billion won. Investigators are focusing on whether the company avoided losses by selling treasury shares without disclosing that履行 of the Tesla supply contract was substantially difficult.
FSS Chairman Criticized Disclosure as Malicious in February Testimony
The investigation was anticipated. FSS Chairman Lee Chan-jin appeared before the National Assembly's Political Affairs Committee in February and strongly criticized L&F's correction disclosure as "malicious disclosure at the level of substantial false disclosure." He stated that "when mid-course prior changes occur in long-term supply plans, I believe there is an obligation to report this to investors through timely disclosure."
FAQ
What did FSS Special Judicial Police do on the 27th regarding L&F?
FSS Special Judicial Police raided Korea Exchange on the 27th and secured disclosure materials and review process documents submitted by L&F related to the company's Tesla supply contract correction disclosure.
How much did L&F reduce its Tesla contract disclosure?
L&F reduced its Tesla high-nickel cathode material supply contract from 3.8347 trillion won disclosed in February 2023 to 9.7306 million won on December 29 last year, two days before contract expiration.
What is the investigation examining about L&F's treasury share disposal?
The investigation is examining whether L&F avoided losses by disposing of 1 million treasury shares for 128.1 billion won to overseas institutional investors on December 2 last year without disclosing that履行 of the Tesla supply contract was substantially difficult.
