Seoul prosecutors’ office has indicted eight officials at Samsung Securities, the brokerage arm of the country’s largest conglomerate, on charges of fraudulent trading, breach of trust and violating capital market laws. The planned suits come amid a probe into a massive stock issuance error.
Prosecutors said Monday that among the 21 employees who sold shares the company mistakenly issued during the fat finger incident, three employees would stand trial while being detained. Another five were indicted but without physical detention, as their transactions were “smaller in volume and fewer in frequency.”
Prosecutors have cleared two officials of the blunder and dropped charges against nine employees because the amount of money involved was relatively small.
The fiasco occurred earlier in April when an employee at Samsung Securities mistakenly typed in 1,000 shares instead of 1,000 won ($0.94) per share in dividends that were meant to be paid out to employees under a company compensation plan.
Why Flexibility Matters - What IS Prime, IS Risk Analytics Can Offer YouGo to article >>
As a result of the mistake, the company deposited 2.8 billion shares, worth nearly $105 billion, into employee accounts, which was more than 30 times the number of its outstanding market cap.
The brokerage house realized the mistake shortly after but failed to take immediate action.
The accident caused a public outcry in South Korea, particularly after several major clients cut ties with Samsung Securities. The brokerage’s shares plunged as much as 12 percent on April 6, the day of the blunder.
The regulators also discovered that 16 workers sold a combined five million shares, worth about $190 million, minutes after receiving them. Some others also attempted to make a profit from the error, but the brokerage managed to block them from selling the accidental shares.