South Korean financial regulator had ordered Samsung Securities to suspend CEO Koo Sung-hoon for three months before he himself put in his papers
The chief executive officer (CEO) of Samsung Securities has resigned from his role after the South Korean electronics giant was punished by the country’s financial regulator for an employee’s error that caused an US$ 105 billion stock blunder.
Employee mistakenly issued US$2.8 billion shares to 2,000 employees
In April, the employee had accidentally issued 2.8 billion shares to approximately 2,000 employees instead of 1,000 Korean Won (93 US cents) per shares in dividends under a company compensation plan. These 2.8 billion shares were more than 30 times the number of Samsung Securities’ outstanding shares and worth US$ 100 billion.
The news of Koo Sung-hoon’s resignation was revealed in a regulatory filing on Friday – a day after the Financial Services Commission demanded the electronics company to suspend Koo for three months. Samsung Securities was fined US$ 129,000 (144 million Korean Won) and its stock brokerage business was prohibited from accepting new clients for six months.
Samsung Securities employees who sold the shares were also punished
The South Korean financial regulator has also punished 13 employees who had sold the shares they were issued or were involved in trading the phantom shares credited into their accounts due to the blunder. According to the Financial Supervisory Service (FSS), these employees were each fine US$ 27,000 (30 million Korean Won). Additionally, eight of them have been indicted on charges of embezzlement and fraud.
The FSS statement said, “The workers knew that the shares were wrongfully deposited into their accounts, but they sold the stocks.” The statement added, “The firm didn’t set up standards for internal controls to a level required by the government.”
Following the news of the resignation of the CEO, Samsung Securities stated in a statement that it will “do all its best” to minimise losses of shareholders and clients related to the incident
