South Korea’s Financial Services Commission (FSC) reported sanctions approved by the Securities and Futures Commission against Fidelix for falsifying financial statements and obstructing external audits. Separate measures restrict Hyundai Accounting Corp. and With Accounting Corp. from auditing specified clients following inadequate audit procedures and breaches of auditor rotation rules, respectively. Fidelix colluded with counterparties to record fictitious revenue and related items ranging from KRW 2.943 billion to KRW 3.161 billion annually during 2018-2022, making its operating performance appear stronger to facilitate external fundraising. It also asked counterparties to provide false responses to receivables confirmations. The company must use a designated auditor for three years. The sanctions also include criminal complaints against Fidelix, its former chief executive and one other individual. Hyundai Accounting faces a three-year prohibition on auditing an unnamed client after inadequate procedures on sales and purchases left accounting violations insufficiently reflected in its audit opinions for 2017-2020. With Accounting allowed the same director to conduct audits for six consecutive financial years at three companies, breaching rotation requirements. It is prohibited from auditing those companies for two years. Both firms must make additional contributions to the joint compensation fund. Financial penalties for Fidelix, related individuals and Hyundai Accounting remain subject to final FSC decisions.

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