Seoul: Someone at Samsung Securities Co, one of South Koreas largest brokerages, was trying to pay employees 1,000 won (93 US cents) per share in dividends under a company compensation plan.
Somehow, they gave them 1,000 Samsung Securities shares instead.
In total, the company distributed 2.83 billion shares, worth on paper about 112.6 trillion won.
That was more than 30 times the companys market value.The fact that the shares didnt exist didnt stop 16 employees from selling them.
And that spurred a rout in Samsung Securities stock.
It plunged as much as 12 per cent in the space of minutes on April 6, the biggest decline since the global financial crisis.
Many retail investors got burned.Then the recriminations started.
People are angry with Samsung Securities.
Theyre angry with the employees who sold the phantom shares.
And theyre angry with the government and regulators for the system that allowed people to dump stock they didnt own and wasnt even real.Nobody expected to see something like this, said Hwang Seiwoon, a Seoulbased research fellow with the capital markets division of Korea Capital Market Institute Co., a research company.
An employee selling a million company shares during business hours Now, thats weird.The fiasco has been dubbed the ghost stock incident by major local news media outlets.
Regulators are reviewing Samsung Securities internal controls.
On Monday, South Koreas giant pension fund stopped using Samsung Securities brokerage services.
The brokerage says it will sternly punish staff who sold the shares, and repay shareholders who lost money when the stock tanked.