The 2018 Samsung fat-finger error was a

fat-finger error A fat-finger error is a keyboard input error or mouse misclick in the financial markets such as the stock market or foreign exchange market whereby an order to buy or sell is placed of far greater size than intended, for the wrong stock or contract ...

on April 8, 2018, in which an employee of Samsung Securities mistakenly distributed

shares In financial markets, a share is a unit of equity ownership in the capital stock of a corporation, and can refer to units of mutual funds, limited partnerships, and real estate investment trusts. Share capital refers to all of the shares of an ...

worth to employees. The company is the stock trading arm of the Samsung conglomerate and is engaged in financial services including securities and investment banking sectors primarily in Korea, China, the United States, the United Kingdom, Japan, and Hong Kong.

Error

The error happened when Samsung Securities tried to pay a dividend to about 2,000 employees who participated in the company stock ownership plan. The intent was to give each of those employees 1,000

South Korean won The Korean Republic won, unofficially the South Korean won ( Symbol: ₩; Code: KRW; Korean: 대한민국 원) is the official currency of South Korea. A single won is divided into 100 jeon, the monetary subunit. The jeon is no longer used f ...

, worth about , but instead issued 2.8 billion shares. These shares were worth about 112.6 trillion won, or 30 times the

market capitalization Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders. Market capitalization is equal to the market price per common share multiplied by t ...

of the company. The company noticed the error 37 minutes later. However, while the shares were issued and before the company noticed, 16 employees sold the shares which the company gave them. Some of these employees, according to the country's

Financial Supervisory Service The Financial Supervisory Service (FSS) is South Korea's integrated financial regulator that examines and supervises financial institutions under the broad oversight of the Financial Services Commission (South Korea), Financial Services Commission ...

, proceeded with the sale despite receiving warnings from the company. The employees who sold their shares could have received each. A South Korean financial watchdog later found that 21 employees traded or attempted to sell their shares to profit from the error and were promptly reported to prosecutors. When Samsung Securities provided the shares, it used a process of naked short selling which is illegal in Korea and which the computer infrastructure was not supposed to allow.

Consequences

The error caused the price of Samsung stock to drop by 11 percent within a day and to fluctuate after that. The Financial Supervisory Service said that the incident undermined trust in the Korean capital market. The

National Pension Service The National Pension Service of Korea (NPS; ) is a public pension fund in South Korea. It is the third largest in the world with $800 billion in assets, and is the largest investor in South Korea. South Korea's National Pension Service (NPS), wh ...

halted trading immediately after the error. This pension fund has 136 trillion won or invested in the Korean stock market. By May 7, 2018, Samsung Securities stated that it would file criminal lawsuits against employees who sold their shares during the fat finger incident. On May 28, 2018, government prosecutors raided the Samsung offices.

References

{{reflist Samsung User errors 2018 in South Korea 2018 in economic history Economic history of South Korea April 2018 events in Asia April 2018 events in South Korea