The Supreme Court has issued a final ruling that Samsung Securities must pay 1.8 billion won in damages to the National Pension Service for losses it incurred when its share price fell due to the 2018 "ghost stock dividends" incident.
The Supreme Court's Second Division (presiding Justice Oh Kyung-mi) on the 12th dismissed both sides' appeals in the damages suit filed by the National Pension Service against Samsung Securities and finalized the lower court's judgment that Samsung Securities must pay 1.8 billion won to the National Pension Service.
At Samsung Securities, at 9:30 a.m. on Apr. 6, 2018, due to an input error by a staffer on the securities management team, 1,000 shares per share were paid as dividends to 1,018 employees eligible for employee stock ownership dividends, instead of 1,000 won per share. As a result, 2,812,956,000 shares—more than 30 times the 89 million shares issued by Samsung Securities—were credited to their brokerage accounts. So-called "ghost stocks," which cannot actually exist, had been deposited into the accounts.
When the ghost stocks came in, 22 Samsung Securities employees placed sell orders for 12.08 million shares, and of those, actual sale contracts were executed for 5.3 million shares by 16 employees. Due to the massive selling, Samsung Securities shares, which had closed at 39,800 won the previous day, were trading at 35,150 won at about 9:57 a.m. on the day of the incident, down 11.7%.
The National Pension Service, which held Samsung Securities shares, filed a lawsuit seeking 29.89411 billion won in damages from Samsung Securities, saying that the ghost stock dividends incident caused realized losses from selling shares at prices below the normal market price or valuation losses from holding undervalued shares.
In the first trial, the court ordered Samsung Securities to pay 1.86681 billion won to the National Pension Service. While recognizing Samsung Securities' liability for damages, the first-instance court accepted experts' appraisals and recognized the National Pension Service's losses at 3.86183 billion won.
It then limited Samsung Securities' liability for damages to 50% of the losses. The first-instance court found it harsh to hold the company fully liable because the incident resulted from the responsible employee's mistake and employees' personal misconduct. It also found that the National Pension Service profited by buying Samsung Securities shares that fell in price due to the incident, and that the gains should be deducted from the losses.
The appellate court dismissed both sides' appeals. The Supreme Court also dismissed both sides' appeals, saying the lower court's ruling—recognizing Samsung Securities' liability for damages and ordering payment of only 50% of the total losses—was justified.