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‘Fat-finger’ mistake leads to charges against eight

July 10,2018
The prosecutors’ office investigating Samsung Securities’ “fat-finger mistake” decided to indict eight out of 21 employees of the brokerage firm that sold “ghost” shares given to them by mistake.

While initially the Financial Supervisory Service said 22 employees sold those shares, only 21 were turned over to the prosecutors’ office as one canceled the sale of a single share, which he claimed was committed out of pure curiosity.

The Seoul Southern District Prosecutors’ Office on Monday said a total of eight were indicted and three of them arrested. Two employees were let off the hook without any charges and 11 were given suspended indictments, which in Korean law is pretty much the same.

At 9:30 a.m. on April 6, 2.8 billion “ghost” Samsung Securities shares were placed in the accounts of 2,018 employees due to a mistake by a company employee.

The employee was supposed to transfer 1,000 won ($0.93) to each employee as a dividend payment. But in a so-called fat-finger mistake, the employee gave each fellow employee 1,000 shares of Samsung Securities.

According to the prosecutors’ office, sixteen among the 21 employees sold 5.01 million shares valued at 182 billion won in the market. The rest canceled their sales.

A 37-year-old in the corporate finance department got 1,479,000 shares in his account that morning and sold 1,118,977 shares worth 41.5 billion won. A 44-year-old in the same department sold 565,000 shares out of the 2,116,000 shares he received for 20.5 billion won and a 33-year-old in the sales department sold all 1,445,000 shares for 51.2 billion won. All three were arrested and indicted on three charges: violating the capital market law, fraud committed by a computer and breach of duty.

The three who were arrested Monday were charged with malicious intent for selling the “ghost” shares and trying to make huge profits, even after the stock exchange initiated a volatility interruption mechanism as Samsung Securities stock value plummeted as much as 11.68 percent during the day.

The five that were indicted but not arrested also sold their “ghost stocks” but were not arrested as they were considered less malicious. Unlike the three that sold their shares off in several batches, the other five either sold the “ghost” shares at a lesser price or only made one sale.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]