[DigitalToday reporter Sangyeop Oh (오상엽)] A damages lawsuit filed by the National Pension Service, which suffered losses from Samsung Securities' so-called ghost shares dividend incident, has ended after about 7 years. The Supreme Court upheld a lower court ruling that capped Samsung Securities' liability at 50 percent and ordered it to pay about 1.87 billion won to the pension fund.

The Supreme Court's second bench, with Justice Kyung-mi Oh (오경미) presiding, on Tuesday upheld an appellate ruling that partly found for the plaintiff in the National Pension Service's damages claim against Samsung Securities. Appeals filed by both the National Pension Service and Samsung Securities were rejected.

The Supreme Court said there were no legal errors in the lower court's decision to recognize Samsung Securities' liability while limiting it to 50 percent of the total damages.

It also upheld the finding that damages were the gap between the actual sale price of shares disposed of by the National Pension Service after the incident and a normal price that would have formed absent the incident.

The incident occurred on April 6, 2018, during Samsung Securities' employee stock ownership dividend process. A staff member was supposed to enter a cash dividend of 1,000 won per share but mistakenly entered it as 1,000 shares per share, leading to 2,812,956,000 shares being wrongly credited to the accounts of 2,018 employee stock plan members. The amount was more than 30 times Samsung Securities' outstanding shares at the time.

After that, some employees sold the wrongly credited shares on the market, sending Samsung Securities shares down as much as 11.68 percent intraday from the previous session to 35,150 won. The National Pension Service also sold Samsung Securities shares in the process and suffered losses.

In June 2019, the National Pension Service filed suit against Samsung Securities, seeking about 29.9 billion won plus late-payment damages. The pension fund argued that losses during the period the incident's effects continued, and additional buying costs for defensive purposes, should be included in damages.

Samsung Securities, in contrast, said the direct impact of the share price fall should be limited to the day of the incident.

The first and second instances found Samsung Securities at fault for failing to properly build a dividend system and for not sufficiently establishing internal control and risk management standards to prevent errors in dividend operations. They recognized the period of direct impact on the share price as from the day of the incident to 3 trading days after.

They also said the incident began with an unintentional input error by the staff member, some employees intentionally sold the wrongly credited shares, and various factors including media coverage and financial regulators' actions affected the post-incident share price drop. On that basis, they limited Samsung Securities' liability to 50 percent. The damages Samsung Securities was ordered to pay the National Pension Service were set at about 1.87 billion won.

Ahead of the ruling, individual investors who sued Samsung Securities, saying they suffered losses from the ghost shares incident, also previously secured final rulings partially in their favour.

Last month, the Supreme Court dismissed Samsung Securities' appeal without a full hearing and upheld a lower court ruling ordering Samsung Securities to pay about 28.5 million won, or 50 percent of the damages, to the investor.

A Samsung Securities official said of the Supreme Court ruling, "We respect the court's final decision."