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🇰🇷 South Korea /Crime & Justice

Supreme Court Upholds Ruling: Samsung Securities to Pay 1.8 Billion Won to National Pension Service Over Dividend Error

From Hankyoreh · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Sources not specified Outcome reported
  • South Korea's Supreme Court confirmed a ruling ordering Samsung Securities to pay approximately 1.8 billion won to the National Pension Service for damages caused by a 2018 stock dividend error.
  • The incident involved Samsung Securities mistakenly issuing 1,000 shares instead of 1,000 won per share to 2,018 employees, leading to a massive over-issuance of shares and market volatility.
  • The court found Samsung Securities liable for failing to establish adequate risk management and internal control systems, upholding the lower courts' decision to award 50% of the calculated damages.

South Korea's top court has finalized a ruling requiring Samsung Securities to compensate the National Pension Service (NPS) with about 1.8 billion won. The compensation stems from significant financial losses incurred by the NPS due to a major stock dividend error in 2018.

This project is not about paints, new hoops or putting a logo on that fence. It is about renewing the passion for basketball, bringing talents here and hopefully raising stars here.

— Naji AwadaMarketing Manager of Planet Bottling Company, speaking on the objectives of the American Cola Creative Court renovation.

The incident, dubbed the 'ghost stock dividend accident,' occurred when Samsung Securities mistakenly distributed 1,000 shares to employees instead of the intended 1,000 won dividend. This error resulted in the erroneous issuance of over 2.8 billion shares, vastly exceeding the company's total issued shares at the time and causing severe market disruption.

Despite swift action to halt trading, the erroneous shares flooded the market, causing Samsung Securities' stock price to plummet by over 11% on the day of the incident. The Korea Exchange's volatility-mitigation circuit breaker was triggered multiple times. The company also faced regulatory penalties, including a fine of 144 million won and a 1 billion won penalty for violating fair trade order.

For American Cola, globally, the countries that we belong to love basketball. In Lagos, we are identifying all the communities where they play basketball and seeing what we can do to improve the conditions of the players, the courts and the community to ensure there is growth of the game in Lagos and the country.

— Franklyn EluaguCommunications Manager of Planet Bottling Company, explaining their strategy for supporting basketball in Lagos.

The NPS, a major shareholder, sued Samsung Securities for approximately 29.9 billion won, citing inadequate dividend systems and internal controls. Both lower courts ruled in favor of the NPS, ordering Samsung Securities to pay damages equivalent to 50% of the difference between the normal stock price and the actual sale price during the period of volatility. The Supreme Court has now upheld this decision, confirming Samsung Securities' liability.

The partnership has already started benefiting the youths of Odi-Olowo/Ojuwoye. We have lots of participants here and from other local governments coming to use this court.

— Olamilekan AdeyiLeader of the Legislative House of the Odi-Olowo/Ojuwoye LCDA, commenting on the impact of the renovated court.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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