Seoul's Financial authorities are looking
into a major trading error at Samsung Securities.
Last Friday's shocking incident led to almost
three billion non-existent stocks being dished
out as dividends to the company's employees.
Kim Hyesung gets us up to speed with the developments.
South Korea's Financial Supervisory Service
on Tuesday called for brokerages to strengthen
their internal control systems in the wake
of Samsung Securities' trading error.
At a meeting with 17 brokerage firm representatives,
the FSS governor Kim Ki-sik urged the brokerages
to come up with measures to rebuild investor
trust and strengthen ethics rules for employees.
The gathering comes a day after the financial
watch dog launched a special investigation
into Samsung Securities and stock trading
across the sector.
Samsung Securities on Friday mistakenly issued
2-point-8 billion shares to employees instead
of issuing them with dividends worth 2.8 billion
Korean won under an employee stock ownership
plan.
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.'
On top of the special investigation launched
Monday, the Financial Supervisory Service
plans to do a nine-day on-site inspection
into Samsung Securities starting Wednesday
to look into how it sold the ghost stocks,
which were neither issued, nor even 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.
The firm's woes deepened on Tuesday as South
Korea's national pension fund suspended direct
trading with the broker on concerns over stability.
As of Tuesday morning, over 200-thousand Koreans
signed a Blue House online petition demanding
tighter regulation and punishment for the
employees involved.
Kim Hyesung, Arirang News.
