The controversy surrounding fabless startup Fadu’s initial public offering has led the Korea Exchange, the country’s sole bourse operator, to implement tighter regulations on its listing track for tech firms.

Fadu, established in 2015, went public on the tech-heavy Kosdaq in early August through the KRX’ special technology-growth track, which provides relaxed IPO rules for tech firms.

The company’s corporate value at the time of the listing was believed to be around 1.5 trillion won ($1.1 billion) yet it had plummeted nearly 40 percent to 872 billion won as of Friday, after suspicions arose that the firm and its underwriters had purposely withheld relevant information to boost its IPO price.

The suspicions were raised after Fadu released its third-quarter results on Nov. 8, the first mandated earnings report since the listing. The report showed third-quarter sales of 300 million won, a 97.6 percent on-year drop. Furthermore, it failed to state its second quarter sales had dipped to 59 million won in its report for the IPO submitted to the Financial Supervisory Service in July.

While financial authorities have announced they will look into Fadu's listing process in response to the suspicion, the KRX said it will strengthen the screening duties of underwriters for the technology-growth track.

The underwriters will be penalized through a strengthened put back option if the listed firms face delisting or are subject to KRX monitoring because of poor management.

Meanwhile, other tech firms which have made their IPO debuts through the same track as Fadu have come under scrutiny, too.

According to the Korea Exchange data, the current stock prices of 17 out of 27 firms, 63 percent of those which have made their debut under the same track, are below their market debut prices.

Fadu’s plunging stock prices led to a class action lawsuit against the firm’s IPO underwriters Korea Investment & Securities and NH Investment & Securities. Hannuri Law Firm said it will represent the shareholders of Fadu in the lawsuit, which claims the company violated the Financial Investment Services and Capital Markets Act during the IPO.