Regulators urge punishment of 21 Samsung Securities employees

By Lim Chang-won Posted : May 8, 2018, 17:16 Updated : May 8, 2018, 17:16

[Yonhap Photo]


SEOUL -- Financial regulators called Tuesday for a criminal probe by state prosecutors into 21 employees at the brokerage arm of South Korea's largest Samsung conglomerate over a fat-finger trading scandal that led to the trading of non-existent "ghost" stocks paid as dividends.

Under a stock ownership plan, Samsung Securities had planned to pay cash dividends of 1,000 won (0.94 US dollars) to 2,018 employees on April 6, but shares were paid due to a keyboard entry mistake. The company found 16 employees sold five million "ghost" shares quickly to gain profits and five others made unsuccessful attempts to sell shares.

The unprecedented mistake sparked concerns about the credibility of securities firms. Financial regulators said it revealed a "serious" problem in the internal trading system of Samsung Securities and "moral hazard" among employees.

The Financial Supervisory Service (FSS) urged prosecutors to punish the 21 employees on charges of dereliction of duty and embezzlement. It also vowed to punish Samsung Securities and its managers.

"It was a one-man error," FSS vice chief Won Seung-yeon told reporters, saying the watchdog's probe revealed "structural" problems at Samsung Securities. "There was no manual for how to deal with such an accident," he said, accusing the company of failing to catch errors in advance because it has no emergency plan for risk management.

Under a prolonged private contract, the trading system of Samsung Securities has been managed by Samsung SDS, which provides information technology services, he said, suggesting the contract should be investigated to see whether it violated any anti-trust regulations.

Samsung Securities has admitted the incident was caused by sloppy business handling and the lack of vocations ethics. FSS head Kim Ki-sik said earlier that that non-existent "ghost" stocks paid to employees as dividends was not a simple human error, urging other securities firms to check their system to prevent similar mistakes.
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