Samsung Securities vows to make amends for losses caused by dividend mishap
- 6 years ago
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.
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.