Error gives Samsung Securities staff free stocks

Samsung Securities said Friday it mistakenly paid its employees stock dividends, prompting the brokerage’s share prices to fall and raising moral hazard concerns.

Under an employee stock ownership plan, Samsung Securities had originally planned to pay dividends of 1,000 won ($0.93) to its employees. However, the brokerage paid dividends of 1,000 shares after a worker processed the wrong figure.

“There was a computational problem today that resulted in shares, instead of dividend payouts, being made,” said an official at Samsung Securities. It said the error took place during the process of putting dividend payouts into employee accounts.

Samsung Securities fixed the error, but some employees had already sold the stocks, said the official, who spoke on the condition of anonymity.

At the end of last month, the brokerage’s employees held 2.83 million shares of Samsung Securities. About 5 million shares of the erroneously paid dividend were sold Friday, according to the brokerage.

Tens of employees at Samsung Securities were found to have sold the stocks they received.

Questions were raised about whether the employees could sell the mistakenly deposited shares, which do not exist, on the stock market and how they could sell the shares without reporting it to the brokerage.

An official at the Financial Supervisory Service (FSS), the nation’s financial watchdog, said the FSS will consider looking into the case after reviewing an ongoing inspection by Samsung Securities.

Shares of Samsung Securities plunged 11.68 percent to 35,150 won during the day, rising to close at 38,350 won, down 3.64 percent.

Yonhap