Samsung in €270m ‘fat finger’ bungle

Broker Samsung Securities’ woes deepened as South Korea’s biggest pension fund stopped using the broker to trade stocks in the wake of a ‘fat finger’ error that has prompted a huge public outcry and calls for change in the industry.

Anger over the accidental issuance of 2.8 billion shares to employees — more than 30 times the number of its outstanding shares and theoretically worth some €80 billion, has only gained momentum after it was discovered that 16 workers quickly sold off shares.

Authorities have launched an investigation into Samsung Securities, the country’s fourth-biggest broker by market value, as well as into the stock trading across the sector.

“Samsung should quickly recognise this situation as a crisis. This is not just a problem of 16 employees, it is a company and industry-wide issue,” said Kim Tae-gi, an economics professor at Dankook University.

The company issued the shares in error last week when it was supposed to pay dividends to employees under a stock ownership plan, with a worker entering “shares” into a computer.

It took the firm 37 minutes to realise the error and halt trading by its employees.

During that time, some employees sold off the stocks mistakenly given, ignoring warnings from the company, the Financial Supervisory Service said. Since then, Samsung Securities stock has lost 10%, wiping about €270m from its market value.

An official with the National Pension Service, the world’s third-biggest pension fund, declined to disclose the volume of the fund’s stock trading done through Samsung. 

It had 136 trillion won (€103bn) of its assets invested in the local stock market as of January.

The fund will continue to outsource fund management to Samsung until regulators announce results of the ongoing investigation, the official added.

The Financial Supervisory Service urged domestic brokerages to strengthen their internal control systems and work to rebuild investor trust, saying the error was a massive shock but also an opportunity to build a solid trading environment.

Over the last three days, more than 200,000 people have signed a petition on the presidential Blue House’s website, calling for employees who sold off the shares to be severely punished.

Separately, Samsung SDI has said it would sell shares worth 582 billion won in affiliate Samsung C&T Corp to resolve cross-shareholding ties and secure funds for investment.

The announcement comes after the country’s antitrust agency said in December that SDI would have to sell Samsung C&T shares in order to comply with stricter guidelines on cross-shareholdings.


More on this topic

Samsung to replace plastic packaging with sustainable materials

Samsung joins Apple to share global revenue pain

Samsung ‘to announce foldable smartphone’

Samsung tablet is just what doctor ordered

More in this Section

Comment: New York dodged a bullet as Amazon cancels expensive HQ plan for city

UK to launch new review of auditors

Goods exports to Britain fall as imports rise in 2018

Sterling traders mull effects of May’s latest defeat


Alexa Chung’s London Fashion Week show was all about female empowerment

More From The Irish Examiner