Samsung Securities’ ‘fat-finger’ fallout goes onSamsung Securities has decided to criminally charge employees that sold the “ghost shares” they received by mistake last month.
The brokerage firm Monday said that in addition to criminal charges, it is threatening civil suits against the rogue employees as well as the company’s own penalties.
Also, 27 executives including the company’s CEO Koo Sung-hoon have decided to purchase company shares to emphasize the organization’s renewed morality, maximize shareholders’ value and protect outside investors, promises included in a public apology for the “ghost shares” blunder.
The execution of these promises will be led by a new innovation department.
The top brass will be purchasing the company’s stock after it announces its first quarter performance. While each and every one of the 27 top brass will purchase shares on different dates, the purchases will be publicly disclosed.
The company is also looking into creating a fund to protect its investors. The fund will be used to reimburse investors and pay for free legal consultation when they suffer from financial losses resulting from accidents or illegal practices.
The fund could be managed by Samsung Securities or a third-party public institution.
On employee management, the company has already introduced several tougher sets of rules since last month, such as banning employees from making online stock trades, including on mobile apps.
It has plans to renew its ethics code.
At 9: 30 a.m. on April 6, 2.8 billion “ghost” Samsung Securities shares were placed in accounts of 2,018 employees due to a mistake a company employee made.
The employee was supposed to transfer 1,000 won ($0.93) to each employee as a dividend payment. But in a so-called fat-finger mistake, the employee gave each fellow employee 1,000 shares of Samsung Securities.
While most employees realized it was an error, 16 tried to profit from it, releasing over 5 million “ghost shares” into the market, which resulted in Samsung Securities shares falling 12 percent.
Due to the incident, institutional investors including its biggest client National Pension Service incurred losses.
The NPS is the company’s second-largest shareholder after Samsung Life Insurance. The pension fund announced that it will stop direct transactions with the brokerage firm. Other institutional investors including the Teachers Pension and the Government Employees Pension Service made similar decisions.
“All of our employees deeply regret that the recent blunder has caused major concerns not only to our investors but also to the general public,” said CEO Koo. “We will faithfully execute every innovative measure even when faced with whatever pain that comes with it, with a determination to change our entire DNA.”
Samsung Securities’ share value is down nearly 5 percent since the April 6 crisis happened.
BY LEE HO-JEONG [firstname.lastname@example.org]