Supreme Court Rules Samsung Securities Must Pay NPS 1.8 Billion Won in 'Ghost Stock' Dividend Error

The National Pension Service (NPS), which suffered losses from the 2018 Samsung Securities dividend error incident, has won its final lawsuit against Samsung Securities.

The Supreme Court's Second Division (Presiding Justice Oh Kyung-mi) finalized the lower court's ruling in favor of the plaintiff in part today (August 12) in a damages lawsuit filed by the NPS against Samsung Securities.

Consequently, Samsung Securities is required to pay 1.86 billion won to the NPS.

On April 6, 2018, due to an employee's mistake, Samsung Securities distributed 1,000 shares per share instead of a cash dividend of 1,000 won per share for employee stock ownership.

At the time, the shares distributed to employees amounted to 2.81295 billion shares, valued at 112 trillion won.

This exceeded Samsung Securities' articles of incorporation regarding the limit on share issuance by dozens of times, earning it the nickname "ghost stocks."

Chaos ensued after some employees who received the ghost stocks proceeded to sell them.

The shares sold by employees reached 5.01 million shares, causing Samsung Securities' stock price to plummet by up to 11.7% during intraday trading.

The NPS filed a lawsuit claiming damages of 29.9 billion won due to the drop in stock prices.

In August 2024, the first-instance court ruled that Samsung Securities should pay 1.86 billion won.

The first instance pointed out, "Although Samsung Securities needed to establish internal processing standards or guidelines regarding dividend work procedures and requirements to prevent risks such as over- or mis-issuance of dividends, it failed to do so."

It also explained that even after the dividend accident occurred, accident dissemination and notices prohibiting sales were not properly carried out, and measures such as blocking sell orders on executive and employee accounts were delayed, resulting in massive selling.

The first instance limited Samsung Securities' liability to 50%, stating, "The accident occurred due to unintended errors by the dividend staff or personal misconduct by the selling staff, and making the company bear all the losses is somewhat harsh."

Accordingly, the compensation amount was calculated as 1.86 billion won by offsetting the profit gained by the NPS from purchasing at dropped stock prices against 50% of the 3.86 billion won in damages calculated by subtracting the actual selling price of the NPS from the stock price that would have normally formed had there been no accident.

Both sides appealed, but the second-instance ruling remained the same.

Like the first instance, the second instance did not accept the claim by the NPS that Samsung Securities also bore employer liability under the Civil Act as an employer of the employees in charge of dividend work.

However, the Supreme Court stated, "There is a high possibility that a significant causal relationship is recognized between the occupational negligence of the employees in charge of dividend work and the losses of the NPS," and recognized employer liability under the Civil Act, differing from the second instance.

Nevertheless, it dismissed the appeal, stating, "Even if employer liability is additionally recognized, the scope of damages in the second instance is correct as a result."

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.