Samsung Securities CEO Koo Sung-hoon on April 11 denied rumors that the brokerage could have issued “ghost stocks” even before the latest fiasco involving its 16 employees who sold 5.01 million stocks wrongly wired to them to profit from the error.
“According to our own investigation, there has been no such case so far,” he told reporters after a meeting with the Korea Financial Investment Association, a business lobby of local brokerages.
“Still, I cannot be so sure about the possibility because a separate inspection is being conducted by the financial authorities.”
|Samsung Securities CEO Koo Sung-hoon|
Samsung Securities faces W10b loss on ‘ghost stocks’
The CEO added the firm would put priority on customer compensation, saying a more detailed plan would be announced soon.
Samsung Securities mistakenly issued 2.8 billion nonexistent shares on April 6, when it was supposed to pay dividends worth 2.8 billion won to employees under a stock ownership plan. Despite warning notifications, 16 employees, including some ranking officials and analysts, sold 5.01 million shares, worth about 200 billion won.
Following the massive sell-off, the stock tumbled almost 12 percent, knocking off more than 230 million won from the firm’s market value. The following are excerpts from the interview with the CEO.
Q: What’s your compensation plan for investors?
Koo: The KOFIA chairman has also stressed compensation for investors, among other things. We have launched a task force to accept compensation claims. The final plans will be decided soon in cooperation with the financial authorities.
We made a grievous mistake. Regardless of our legal responsibility, we will try our best to compensate any losses caused for investors. There will be no time limit. Q: Can you specify when the losses occurred?
Koo: We are still discussing the issue with regulators. Our own tentative plans could come out today or tomorrow. Q: Why don’t you reveal more details to the public?
Koo: We will do so as soon as possible. But you need to understand there are some limitations in revealing our own findings because a separate inspection is underway by regulators. Q: Of the 16 employees, are those who sold the stocks before the notification subject to penalties?
Koo: Of course. Q: There are speculations that your company could have issued “ghost stocks” before. What do you think?
Koo: According to our own probe, there has been no such case so far. But I cannot be so sure about the possibility because regulators are carrying out a separate inspection. Q: Is this a system issue or a mistake by an employee?
Koo: I think both have problems. Humans can make a mistake so a proper system should have been in place to prevent the error.
By Lee Ji-yoon (email@example.com