Samsung Securities has admitted to mistakenly
paying its employees stock dividends, prompting
the brokerage's share prices to collapse.
For more on the trading error,... and what
the company plans to do to make amends,...
Lee Seung-jae reports.
Samsung Securities had planned on Friday to
pay dividends of one-thousand won or just
under a dollar to each of its employees under
a stock ownership plan.
However,.. in a colossal blunder,... the company
mistakenly paid dividends of one-thousands
shares,... for each share owned by an employee,...
which would amount to two-point-eight billion
shares worth well over 100 billion U.S. dollars.
The blunder caused the firm's stock price
to plunge by more than eleven percent during
trading on Friday,... but it recovered a bit
before the market's close.
According to an official,... who spoke on
the condition of anonymity,... while Samsung
Securities fixed the errors,... some employees
had already sold the stocks.
Questions were raised on whether the employees
could actually sell the mistakenly deposited
shares, which technically do not exist on
the stock market,... and how they could sell
the shares without reporting it to the brokerage.
In addition to the sheer size of the blunder,...
the orders were 'naked short-selling',...
an option that was banned in 2008, in the
wake of the collapse of Lehman Brothers and
the global financial meltdown.
In an approved short-sale or covered short-selling,...
traders must borrow a stock before they sell
it short.
However, a naked short-seller is not required
to borrow the securities in time to make delivery.
On Sunday,... Samsung Securities said it will
make amends to all those affected by the mistake.
CEO Koo Sung-hoon said the brokerage will
do its utmost to regain the confidence of
its customers and take firm action against
moral hazard cases involving its workers.
Reflecting on the gravity of the situation,...
the firm said restitution will be made as
soon as possible,... without going through
long proceedings.
The Financial Supervisory Service has launched
a special investigation,... and will take
a look into how Samsung Securities could issue
non-existent shares,... and how some of the
shares were traded.
Lee Seung-jae, Arirang News.
