Samsung Sec 'fat finger' debacle deepens as pension fund halts trade (updated)

Samsung Securities Co

10/04/2018 05:21

* Country's biggest pension fund to halt stock trade with
Samsung
    * Shares have plunged 10 pct since Friday's fat finger error
    * Public outcry over employees who sold stocks mistakenly
given

 (Recasts and adds comment from regulator, analyst)
    By Ju-min Park and Joyce Lee
    SEOUL, April 10 (Reuters) - Samsung Securities Co Ltd's
 016360.KS  woes deepened on Tuesday 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 $100 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 on Friday when it was
supposed to pay dividends worth 2.8 billion won to employees
under a stock ownership plan, with a worker entering 'shares'
instead of 'won' 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 percent,
wiping about $330 million 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 ($127 billion) 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.
    Financial Supervisory Service Governor Kim Ki-sik urged 
domestic brokerages on Tuesday 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 a 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.
        
  ($1 = 1,070.7000 won)

 (Reporting by Joyce Lee and Ju-min Park; Additional reporting
by Dahee Kim; Editing by Edwina Gibbs)
 ((jungyoon.lee@thomsonreuters.com; +82 2 3704 5609; Reuters
Messaging: jungyoon.lee.thomsonreuters.com@reuters.net))