April 26, 2024

• 

[THE INVESTOR] Samsung Securities, which is facing penalties for a dividend payout fiasco in April, is likely to suffer a serious dent in its brand image, according to KB Securities on June 22.

The Financial Supervisory Services has announced a series of penalties on the brokerage subsidiary of Samsung Group, including a six-month suspension of opening new accounts and a three-month exile of Samsung Securities CEO Koo Sung-hoon, apart from a fine of 100 million won (US$90,225). 

The FSS is also mulling banning four senior executives of the firm from seeking other jobs in the financial industry for the next five years.

A final decision will be taken by the Financial Services Commission, parent agency of FSS.

Samsung Securities said in a statement that it will make an announcement once it gets the final order from the FSC.

The partial suspension of businesses, once finalized, would bring little financial damage but it could take a toll on the brand image which could negatively affect its stock price, according to Lee Nam-suk and Yoo Seung-chan of KB Securities.

For Samsung Securities which aspires to become a giant investment bank it is a brake on such efforts until 2021, according to Shinhan Investment analyst Lim Hee-yeon.

Under the current law, a financial company facing legal restrictions cannot begin new businesses for three years.

The brokerage came under criticism when it accidentally issued non-existent 2.8 billion stocks to employees on April 6, instead of paying 2.8 billion won in cash dividends under its stock ownership plan. Despite being issued a warning, some 16 employees immediately sold off 5 million shares, worth about 200 billion won.

Shares of the KOSPI-listed Samsung Securities fell more than 3 percent in morning trading following the news.

By Park Ga-young (gypark@heraldcorp.com)