South Korea's financial authorities are looking
into the trading error at Samsung Securities
last Friday that led to almost three billion
non-existent stocks being dished out as dividends
to the company's employees.
Kim Hyesung reports.
South Korea's financial watchdog said Monday
it has launched a special inspection into
Samsung Securities over its trading error,
which allowed banned naked short selling orders
to be processed.
The special inspection came as Samsung Securities
on Friday mistakenly paid one thousand shares
to each of its employees for every share they
owned under a stock ownership plan... instead
of paying cash dividends of one-thousand won,
or just under one U.S. dollar,... resulting
in 2.8 billion non-existent stocks being given
out as dividends.
The blunder caused the firm's stock price
to plunge by more than eleven percent during
trading on Friday.
It recovered slightly before the market's
close, but the incident raised concerns over
the firm's trading system and moral hazard
issues as some employees sold the so-called
'ghost stocks'.
The Financial Supervisory Service called the
trading error a "big financial incident that
significantly undermines the safety of, and
trust in, capital markets."
Finance Minister Kim Do-yeon also said Monday
on a local radio program that the financial
authorities will take measures against Samsung
Securities over the transactions.
On top of the special investigation launched
Monday, the FSS plans to do a nine-day on-site
inspection into the firm starting Wednesday
to look into the trading system, and how it
sold the ghost stocks, which were neither
issued, nor existed.
Samsung Securities CEO Koo Sung-hoon apologized
for the blunder Sunday, but the dividend debacle
rekindled concerns that some brokerages could
engage in naked short selling, which has been
banned in South Korea since the 2008 global
financial crisis.
As of Tuesday morning, over 200-thousand Koreans
took to the Blue House online petition page,
calling for regulation of Samsung Securities.
Kim Hyesung, Arirang News.
