S.Korea to begin industry-wide probe after Samsung Securities error (updated)

Samsung Securities Co

09/04/2018 11:55

* Samsung Securities wrongly issued 2.8 billion shares
    * Company issued shares instead of dividends worth 2.8 bln
won
    * Some company employees sold off shares they were given in
error
    * S.Korea finance minister calls for tough penalties
    * Error knocked off $216 mln from the co's mkt value over
two days

 (Adds quote from financial watchdog, background)
    SEOUL, April 9 (Reuters) - South Korea's financial watchdog
on Monday said it would begin a probe into the "overall stock
markets system", after employees of Samsung Securities Co Ltd
 016360.KS  sold off stocks that were mistakenly given to them
last week.
    Samsung Securities, one of South Korea's biggest brokerages,
wrongly issued 2.8 billion shares, when it was supposed to pay
dividends worth 2.8 billion won to employees under a stock
ownership plan. 
    Shares of the company went into a tailspin on Friday,
plunging almost 12 percent at one point, after some of the
employees unloaded the shares given to them in error.
    Describing the sell-off as a "huge financial accident",
South Korea's Financial Supervisory Service (FSS) said the
incident had hurt the stability and credibility of the country's
financial system while causing damages to investors.
    "And therefore there will be a strict probe into the overall
stock markets system," FSS said in a statement.
    Samsung Securities has faced a lot of criticism for wrongly
issuing the shares, which would be worth about 104 trillion won
($97 billion) at Monday's close of 37,200 won.
    The company's shares have shed almost 7 percent over two
days, knocking off $216 million from the company's market value.
    The brokerage, which currently has a market capitalisation
of $3.1 billion, has posted an apology on its website.
    Separately, more than a 100,000 people have signed and
submitted a petition on the website for the presidential Blue
House, demanding severe punishment for employees found guilty.
    Earlier in the day, South Korea's finance minister told
reporters that Samsung Securities employees who had sold stocks
that were mistakenly given to them could face tough penalties.
    "We really have to look into this seriously as it is not
understandable nor tolerable at all that these people sold off
shares that were mistakenly given," Kim Dong-yeon said.
    "If there were problems regarding the workers' moral hazard,
I feel they should be firmly punished."
 ($1 = 1,070.2400 won)

 (Reporting by Shin-hyung Lee and Dahee Kim; Editing by Himani
Sarkar)
 ((Dahee.Kim@thomsonreuters.com; +82 2 3704 5643; Reuters
Messaging: dahee.kim@thomsonreuters.com))