The Supreme Court has confirmed that Samsung Securities must pay approximately 1.87 billion won to the National Pension Service (NPS) for damages incurred during the so-called "ghost stock dividend incident" in 2018. Unlike the lower court's ruling, the Supreme Court concluded that Samsung Securities is liable under civil law for the negligence of its employees responsible for dividend operations.
On August 12, the Supreme Court's second division, led by Justice Oh Kyung-mi, upheld the lower court's decision that partially favored the NPS in its damages claim against Samsung Securities. Both parties' appeals were dismissed.
The court found that Samsung Securities bears employer liability under Article 756 of the Civil Code for the illegal actions of its employees involved in the dividend process.
Previously, the appellate court had determined that there was no significant causal relationship between the negligence of the dividend staff and the damages suffered by the NPS, citing that some employees had sold off incorrectly recorded shares in large quantities.
However, the Supreme Court ruled that considering the liquidity and marketability of Samsung Securities' stock, as well as the circumstances surrounding the large-scale sell-off, the dividend staff could have anticipated that other employees would place sell orders for the incorrectly recorded shares, leading to actual transactions. Thus, a significant causal relationship between the negligence of the dividend staff and the NPS's damages was recognized.
Despite acknowledging additional employer liability, the court concluded that this did not warrant a change in the scope of damages or the limitation of liability. The lower court's decision to limit Samsung Securities' liability to 50% of the total damages was upheld.
The incident occurred in April 2018 during the dividend process for employee stock ownership. Samsung Securities intended to distribute 1,000 won per share to its employee shareholders, but a staff member mistakenly entered 1,000 shares instead of the intended amount. The team leader failed to catch the error and approved it.
As a result, on April 6, 2018, over 28.1 million shares—more than 30 times the intended amount—were incorrectly credited to the accounts of 2,018 Samsung Securities employees. Subsequently, 22 employees placed sell orders for about 12.08 million shares, with actual transactions occurring for approximately 5.01 million shares from 16 employees.
On the day of the incident, trading volume for Samsung Securities surged to about 20.8 million shares, more than 40 times the previous day's volume, causing a sharp decline in the stock price.
The NPS, which held over 11.23 million shares of Samsung Securities at the time, claimed damages of over 29.9 billion won due to the stock price drop following the incident and filed a lawsuit against Samsung Securities in 2019.
The court found that Samsung Securities failed to establish adequate internal procedures to mitigate risks during the dividend process. Considering the circumstances of the incident, the extent of the NPS's damages, and the aftermath, Samsung Securities' liability was limited to 50% of the total damages.
The compensation was also limited to the shares sold by the NPS between April 6 and April 10, 2018, which were directly impacted by the incident. The damages were calculated based on the difference between the actual selling price during that period and the normal price that would have prevailed without the incident, deducting any profits the NPS made from purchasing shares at the lower price.
The first trial ordered Samsung Securities to pay the NPS approximately 1.87 billion won. The appellate court did not accept appeals from either side. The Supreme Court also deemed the lower court's judgment regarding the scope of damages and liability ratio to be ultimately justified, confirming the ruling.
* This article has been translated by AI.
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