Samsung Securities CEO Resigns After $105 Billion Stock Blunder
(Bloomberg) -- The chief executive of Samsung Securities Co. resigned after the company was punished by South Korea’s financial regulator because an employee’s error sparked a $105 billion “ghost stock” blunder.
Koo Sung-hoon’s resignation was disclosed in a regulatory filing Friday, a day after the Financial Services Commission ordered the firm to suspend Koo for three months. The firm was fined 144 million won ($129,000) and its stock brokerage business was barred from taking new clients for six months.
The penalties were imposed after an employee in April mistakenly issued 2.8 billion shares to about 2,000 employees. The employee was supposed to issue 1,000 won (93 U.S. cents) per share in dividends under a company compensation plan.
The regulator also punished 13 employees who sold or were involved in trading the phantom shares deposited into accounts as a result of the blunder. They were each fined 30 million won ($27,000), according to a statement from the Financial Supervisory Service. Eight of them have been indicted on charges of embezzlement and fraud, according to the regulator.
“The workers knew that the shares were wrongfully deposited into their accounts, but they sold the stocks,” the FSS said in the statement. “The firm didn’t set up standards for internal controls to a level required by the government.”
With the replacement of the CEO, the firm will “do all its best” to minimize losses of shareholders and clients related to the incident, the company said in a statement.
©2018 Bloomberg L.P.