Korea's $105 Billion Stock Blunder May Result in a Criminal Suit
(Bloomberg) -- Samsung Securities Co. will file criminal complaints to prosecutors against workers who sold shares they received by mistake, after saying last month it would deal “sternly” with the sellers.
The stock sale by the workers “raised moral hazard issues,” the Seoul-based company said in a statement Monday. It also said that all 27 of its executives including chief executive officer Koo Sung-hoon will buy the company’s stock after the announcement of first-quarter earnings by May 15.
The planned suits come after a stock-market blunder that caused the brokerage’s shares to tumble. Samsung Securities distributed stock worth on paper about 112.6 trillion won ($105 billion) by mistake to workers, and 16 employees proceeded to sell the non-existent shares, in a fiasco that has been dubbed the “ghost stock” incident by major local news media outlets.
Disciplinary action by the company and civil procedures due to trading losses are being carried out separately, the brokerage said in Monday’s statement. It also said it’s considering establishing a fund that will help protect smaller investors, and is preparing measures to improve return on equity and shareholder value.
The blunder involved someone at Samsung Securities trying to pay employees 1,000 won per stock in dividends under a company compensation plan. The workers instead received 1,000 shares each in the brokerage. In total, it distributed 2.83 billion shares.
The brokerage’s shares plunged as much as 12 percent on April 6, the day of the blunder. The stock has rebounded about 3 percent from its closing-low last month.
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