SEOUL — Samsung Securities's woes deepened on Tuesday (April 10) as South Korea's biggest pension fund stopped using the broker to trade stocks in the wake of a "fat finger" error that has prompted a huge public outcry and calls for change in the industry.

Anger over the accidental issuance of 2.8 billion shares to employees - more than 30 times the number of its outstanding shares and theoretically worth some US$100 billion (S$132 billion), has only gained momentum after it was discovered that 16 workers quickly sold off shares.

The company issued the shares in error last Friday when it was supposed to pay dividends worth 2.8 billion won (S$3.4 million) to employees under a stock ownership plan, with a worker entering "shares" instead of "won" into a computer.

It took the firm 37 minutes to realise the error and halt trading by its employees. During that time, some employees sold off the stocks mistakenly given, ignoring warnings from the company, the Financial Supervisory Service said.

Since then, Samsung Securities stock has lost 10 per cent, wiping about US$330 million from its market value.

"We have suspended direct trading with Samsung Securities on concerns over decreasing stability in trading after a financial accident occurred," an official with the National Pension Service said.

The authorities have launched an investigation into Samsung Securities, the country's fourth biggest broker by market value, as well as into the stock trading across the sector.

"Samsung should quickly recognise this situation as a crisis. This is not just a problem of 16 employees, it is a company and industry wide issue," said Dr Kim Tae-gi, an economics professor at Dankook University.

An official with the National Pension Service, the world's third-biggest pension fund, declined to disclose the volume of the fund's stock trading done through Samsung. It had 136 trillion won of its assets invested in the local stock market as of January.

The fund will continue to outsource fund management to Samsung until regulators announce results of the ongoing investigation, the official added.

Financial Supervisory Service Governor Kim Ki-sik urged domestic brokerages on Tuesday to strengthen their internal control systems and work to rebuild investor trust, saying the error was a massive shock but also an opportunity to build a solid trading environment.

Over the last three days, more than a 200,000 people have signed a petition on the presidential Blue House's website, calling for employees who sold off the shares to be severely punished. REUTERS