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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] SEOUL, June 4 — South Korea’s Financial Supervisory Service (FSS) is investigating LS Corp. over a disclosure error that overstated a key affiliate’s order backlog by nearly 100 times.
According to industry sources, the regulator has requested an explanation from LS and will determine whether the case constitutes a violation of capital market disclosure rules after reviewing the company’s response.
The issue arose after LS revised its first-quarter report on May 27, sharply lowering order figures for its key subsidiary LS Electric. Order intake was corrected from 2.38 trillion won to 23.8 billion won, while backlog was reduced from 1.54 trillion won to 15.4 billion won.
LS attributed the discrepancy to a clerical error involving unit mismatches between subsidiaries, but critics say the incident exposed weaknesses in the group’s internal control and verification systems.
The revision triggered a market reaction, with shares of LS and LS Electric falling 19% and 15%, respectively, over three trading days, wiping out roughly 3.5 trillion won in market value.
While some analysts view the issue as unrelated to fundamentals, investor concerns over disclosure reliability remain. The FSS is expected to decide on possible sanctions based on the severity and intent of the violation.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
