Key Takeaways
The L&F issue is not simply a dispute over disclosure procedure. A high-nickel cathode material supply contract with Tesla that originally stood at 3.8347 trillion won was corrected to an actual delivery value of just 9.73 million won, shaking the market's formula for discounting secondary battery makers' order backlogs into future earnings.
The Financial Supervisory Service's (FSS) capital markets special judicial police carrying out a raid on Korea Exchange (KRX) on July 27, 2026 is, in nature, more about verifying the process behind the disclosure judgment than about the company itself. Still, a credibility discount tends to attach to the share price well before any legal conclusion is reached.
What Happened
According to the financial investment industry, the FSS's special judicial police are securing L&F's disclosure filings, the company's explanatory statements, documents exchanged during the exchange's review process, and trading records. Korea Exchange (KRX) itself and its employees are reportedly not named as suspects; the core question is whether L&F's corrected disclosure on the Tesla supply contract was made in a timely and sufficient manner.
On February 28, 2023, L&F disclosed that it had signed a contract with Tesla to supply high-nickel cathode material for 2024–2025. At the time, the contract value was 3.8347 trillion won, equivalent to about 395% of the company's revenue in the prior fiscal year. However, on December 29, 2025 — just two days before the contract's expiration — the company revised the contract value down to 9.73 million won. The company explained this as the finalization of the actual delivery amount following a change in supply volume.
The exchange had previously determined that this did not warrant designation as an unfaithful disclosure entity. That judgment reportedly took into account the company's explanation that the actual supply amount was finalized at the contract's expiration, rather than through an early termination or a separate amendment. The context around the investigation is further heightened by the fact that the head of the FSS previously criticized this case in a National Assembly briefing and cited the need to improve the disclosure system.
Background and Context
Valuations for secondary battery material stocks (tickers) start with order backlogs. The problem is that a backlog is not the same as revenue. Cathode material only converts into actual shipments once a customer's EV sales, battery cell makers' utilization rates, raw material prices, quality approvals, and production allocation all line up. Long-term supply contract disclosures put a number on that potential first, but real earnings only materialize once volume and unit price are finalized.
The weight of this case lies in the sheer gap between the figures. 3.8347 trillion won dwarfed L&F's revenue at the time, and the Tesla name itself was a factor that lowered the market's discount rate. But if the actual delivery amount shrank to just 9.73 million won, what investors were looking at was likely not confirmed revenue but the maximum ceiling of a conditional volume. That gap is precisely the disclosure credibility risk.
Impact on the Market and Stocks (Tickers)
- L&F: Bears the greatest direct burden. Regardless of the investigation's outcome, the market may start applying a higher discount rate to future long-term supply contract disclosures, factoring in shipment visibility, the certainty of customer orders, and the possibility of revision.
- POSCO Future M: As a peer holding long-term cathode material contracts, it is affected by any shift in disclosure interpretation standards. Customer diversification and the pace of conversion into actual shipments are key to defending its share price.
- Ecopro BM: As the sector's flagship cathode material stock (ticker), its sector premium could come under pressure. The focus of verification is shifting from headline long-term contract figures to quarterly sales volume and utilization rates.
- Secondary battery materials broadly: The immediate multiple expansion that used to follow positive-catalyst order announcements could weaken. Rather than headline contract size, the market will demand clarity on minimum purchase obligations, termination conditions, and price-linkage structures.
Investor Checkpoints
- Watch how the exchange review materials secured by the FSS's special judicial police assess the timing at which the material change became known, and whether the disclosure was delayed.
- At L&F's next earnings release, check how much of the revenue gap left by Tesla is being filled by other customers and by ESS and EV volumes.
- Monitor whether the exchange's criteria for designating unfaithful disclosure entities change, and whether disclosure obligations for the progress of single sales/supply contracts are tightened.
- For new order disclosures from cathode material makers, prioritize the actual delivery schedule, confirmed customer orders, and advance payment or minimum volume conditions over the headline total.
Outlook
In the optimistic scenario, the investigation results in improvements to the disclosure system, and L&F's operating strength recovers through volume from other customers. In that case, the market could treat the past disclosure risk as a one-time discount. But the condition for that is shipments, not words — utilization rates and quarterly revenue need to recover first.
The risk is broader than that. If this case spreads into a credibility problem for contract disclosures across secondary battery material stocks as a whole, the premium once attached to order backlogs will decline. Investors need to distinguish whether the share price reflects bottoming expectations or an actual demand recovery. The next triggers to watch are the progress of the FSS investigation, the exchange's proposed system improvements, and the pace of L&F's quarterly shipment recovery.
L&F by the Numbers: Real-Time Data
L&F's most recent closing price is 81,400 won (-0.61% from the previous day), and the composite signal combining foreign/institutional supply-demand (order flow) with news and momentum reads 🔴 Caution. With foreign investors, institutional investors, and momentum all turning negative, caution is warranted right now.
- ▼ Dual-side selling — Foreign investors −0.8 billion won and institutional investors −2.5 billion won, selling in tandem
- ▼ Trend alignment — Short- and medium-term downtrend alignment (daily -0.6% · 1-week -2.6% · 1-month -24.5%)
- ▼ 52-week range position — Near the 52-week low, at the 13% percentile
※ Price and foreign/institutional supply-demand (order flow) data are provided by Korea Investment & Securities (KIS) and reflect figures as of publication.
This article is automatically summarized and analyzed content based on the original news report. View original (Maeil Business Newspaper Securities)
