Seoul Central District Court has ruled that Samsung Electronics must compensate victims of a 2018 “liquidation stock” fraud scheme with 50% of their proven damages, even as judges acknowledged significant losses from share price drops.
Background of the Fraud Scheme
In April 2018, Samsung Electronics executives illicitly altered liquidation payouts for certain stocks. Instead of returning the principal amount of 1,000 won per share, they converted it to “1,000 shares,” misleading investors nationwide. This scam inflicted damages exceeding 1 billion won, with 16 executives pocketing 501 million shares for personal gain. Company shares subsequently rose 11%, leaving victims like plaintiff A with substantial losses on holdings tied to Samsung.
Court Proceedings and Key Rulings
During hearings in the civil division (Judge Ye Ji-hui presiding), plaintiff A demanded full compensation from Samsung for 28.52 million won in damages. One judge initially concurred, citing direct harm from the executives’ actions. However, in 2021, the bench noted Samsung’s role in failing to prevent a bond issuance that fueled market concerns and triggered a share plunge.
Samsung representatives argued that executives breached internal duties by mishandling the liquidation system, but emphasized that full institutional safeguards were not in place to avert the fallout.
Final Judgment and Rationale
The court ultimately capped compensation at 50% of total damages. Plaintiff representatives stated, “Share losses stemmed from executives’ negligence and breaches of duty. Holding Samsung entirely accountable would be unfair, as individual culpability does not equate to 100% corporate liability.”
This ruling balances victim redress with corporate responsibility limits, highlighting ongoing scrutiny of internal controls in major firms.
