Samsung Securities ordered to pay 1.9 billion won over 2018 ‘ghost stock’ error

Samsung Securities has been ordered to pay 1.9 billion won ($1.3 million) in damages to the state pension agency over losses stemming from the brokerage’s dividend error in 2018, according to the top court’s ruling on Wednesday.

The Supreme Court upheld a lower court ruling that partially sided with the National Pension Service (NPS) in its damages lawsuit against Samsung Securities.

In April 2018, a Samsung Securities employee mistakenly distributed 1,000 shares for each employee-owned share instead of paying the intended cash dividend of 1,000 won per share.

As a result, employees received a total of 2.8129 billion shares, worth 112 trillion won — dozens of times more than the total number of shares Samsung Securities had actually issued.

The so-called ghost stock situation spiraled after some employees who received the shares in question sold them, which turned the market into turmoil. Employees sold 5.01 million shares, and Samsung Securities’ stock price plunged as much as 11.7 percent during intraday trading.

The NPS, a major institutional investor in the Korean stock market, subsequently filed a lawsuit seeking 29.9 billion won in damages. The pension agency claimed that it had suffered losses from the decline in the share price.

In August 2024, the trial court determined the damages to amount to 3.9 billion won and found Samsung Securities partially liable, ordering it to pay 1.9 billion won. 

“Samsung Securities failed to establish internal standards or guidelines governing dividend procedures and requirements, despite the need for safeguards to prevent risks such as excessive or erroneous dividend payments,” the trial court said. It nevertheless limited the company’s liability to 50 percent because the incident stemmed from an employee’s unintentional mistake.

The appeals court upheld the first-instance verdict and dismissed appeals from both sides.

BY KIM EUN-BIN [lee.soojung1@joongang.co.kr]