Kyobo Life Insurance has filed a complaint with the U.S. accounting regulator against Deloitte Anjin. This is because Deloitte Anjin violated the criteria that should be followed in calculating "fair market value (FMV)."
According to the Financial Supervisory Service's electronic disclosure on March 31, Kyobo Life Insurance filed a complaint with the U.S. Public Company Accounting Oversight Board (PCAOB) against Deloitte Anjin for violating evaluation standards.
Kyobo Life Insurance said, "The Deloitte Anjin is judged to have violated evaluation standards in calculating proper FMV. In the end, the company has filed a complaint because of the prolonged disputes between shareholders, and the loss of management stability and reputation."
The high level of punishment and disciplinary measures for violations of the obligation of accounting firms in the U.S. also played a role.
Kyobo Life Insurance's largest shareholder signed an agreement with financial investor (FI), including the Affinity Consortium, between shareholders that includes put options in September 2012. Since then, FI has exercised put options, and the largest shareholder has reportedly not responded on the basis that there are problems with the legality and validity of the contract. The two sides are currently in the process of arbitration at the International Council for Commercial Arbitration (ICC).
FI's put option exercise date is Oct. 23, 2018. Deloitte reportedly used the peer group's stock price for one year just before the June 2018 standard, not at the time of the event, in calculating FMV.
The corresponding period includes the end of 2017 to early 2018, when shares of major peer groups such as Samsung Life Insurance and Orange Life hit an all-time high, and the price calculated by Deloitte is 409,912 won per share.
Kyobo Life Insurance has also completed preparations for a damage suit against Deloitte Touche Tohmatsu Limited, which is in charge of managing Deloitte Anjin, and plans to submit the petition soon.
“We are working on various measures to minimize the damage to our company,” said a Kyobo Life Insurance official, adding that the complaint and future lawsuits are also aimed at enhancing the stability of the corporate value for all stakeholders, including customers, investors and employees.