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| Kiwoom Securities' headquarters in Yeouido, Seoul / Korea Times file |
The price of Soulbrain's shares went up after Japan's export restrictions on hydrogen fluoride to Korea went into effect on July 4, as the local manufacturer was expected to be able to cover the loss of imports from Japan.
Soulbrain's price per share, which was around 40,000 won at the beginning of this year, almost doubled to over 80,000 won per share at the highest point this month.
However, Kiwoom Securities issued a report July 19, which stated market expectations for Soulbrain share prices were inflated.
The summary of the report stated, "Because the company deals with liquid hydrogen fluoride, it does not have much to do with gas hydrogen fluoride, for which export has been restricted."
For such reasons, the report downgraded expectations for Soulbrain to "underperform," which is usually considered a sign to sell off shares.
Shareholders preparing for the suit claim the report made it appear Soulbrain would not benefit from Japan's export restrictions on hydrogen fluoride, because the report appeared to say Japan's export restrictions did not apply to liquid hydrogen fluoride. This led them to sell off the shares they owned.
Japan's export restrictions apply to both gas and liquid hydrogen fluoride.
Soulbrain requested the report to be revised, and Kiwoom accepted the request. In the revised version, Kiwoom deleted the quoted sentence in the summary.
Shareholders are set to file a suit against Kiwoom. Park Shin-ho, a lawyer with Henem Law, is leading the suit.
"We now have over 30 Soulbrain shareholders in our group of plaintiffs," Park told The Korea Times, Monday. "We plan to file the petition this week."
"We are calculating the estimated losses incurred by the report."
Soulbrain was unreachable for comment.
A Kiwoom spokesperson said, "We only added a few sentences to clarify what the report was intending to state. The changes made did not affect the overall tone of the report."
Kiwoom's report contends Soulbrain produces liquid hydrogen fluoride and that local chip manufacturers are in greater need of hydrogen fluoride in gas form as they are more reliant on exports of gaseous hydrogen fluoride.
