S. Korea's financial watchdog launches inspection into Samsung Securities
- 6 years ago
South Korea's financial authorities are looking into the trading error at Samsung Securities last Friday that led to almost three billion non-existent stocks being dished out as dividends to the company's employees.
Kim Hyesung reports.
South Korea's financial watchdog said Monday it has launched a special inspection into Samsung Securities over its trading error, which allowed banned naked short selling orders to be processed.
The special inspection came as Samsung Securities on Friday mistakenly paid one thousand shares to each of its employees for every share they owned under a stock ownership plan... instead of paying cash dividends of one-thousand won, or just under one U.S. dollar,... resulting in 2.8 billion non-existent stocks being given out as dividends.
The blunder caused the firm's stock price to plunge by more than eleven percent during trading on Friday.
It recovered slightly before the market's close, but the incident raised concerns over the firm's trading system and moral hazard issues as some employees sold the so-called 'ghost stocks'.
The Financial Supervisory Service called the trading error a "big financial incident that significantly undermines the safety of, and trust in, capital markets."
Finance Minister Kim Do-yeon also said Monday on a local radio program that the financial authorities will take measures against Samsung Securities over the transactions.
On top of the special investigation launched Monday, the FSS plans to do a nine-day on-site inspection into the firm starting Wednesday to look into the trading system, and how it sold the ghost stocks, which were neither issued, nor existed.
Samsung Securities CEO Koo Sung-hoon apologized for the blunder Sunday, but the dividend debacle rekindled concerns that some brokerages could engage in naked short selling, which has been banned in South Korea since the 2008 global financial crisis.
As of Tuesday morning, over 200-thousand Koreans took to the Blue House online petition page, calling for regulation of Samsung Securities.
Kim Hyesung, Arirang News.
Kim Hyesung reports.
South Korea's financial watchdog said Monday it has launched a special inspection into Samsung Securities over its trading error, which allowed banned naked short selling orders to be processed.
The special inspection came as Samsung Securities on Friday mistakenly paid one thousand shares to each of its employees for every share they owned under a stock ownership plan... instead of paying cash dividends of one-thousand won, or just under one U.S. dollar,... resulting in 2.8 billion non-existent stocks being given out as dividends.
The blunder caused the firm's stock price to plunge by more than eleven percent during trading on Friday.
It recovered slightly before the market's close, but the incident raised concerns over the firm's trading system and moral hazard issues as some employees sold the so-called 'ghost stocks'.
The Financial Supervisory Service called the trading error a "big financial incident that significantly undermines the safety of, and trust in, capital markets."
Finance Minister Kim Do-yeon also said Monday on a local radio program that the financial authorities will take measures against Samsung Securities over the transactions.
On top of the special investigation launched Monday, the FSS plans to do a nine-day on-site inspection into the firm starting Wednesday to look into the trading system, and how it sold the ghost stocks, which were neither issued, nor existed.
Samsung Securities CEO Koo Sung-hoon apologized for the blunder Sunday, but the dividend debacle rekindled concerns that some brokerages could engage in naked short selling, which has been banned in South Korea since the 2008 global financial crisis.
As of Tuesday morning, over 200-thousand Koreans took to the Blue House online petition page, calling for regulation of Samsung Securities.
Kim Hyesung, Arirang News.