By Park Si-soo
Staff Reporter
Daewoo Securities has been ordered to compensate an investor for losses resulting from its stock dealer's "arbitrary" investment, a court said Monday.
The Seoul High Court askedDaewoo to pay 11 million won in compensation to its client, identified by his surname Choi.
The ruling overturned a lower court's decision that clients should take primary responsibility for their money.
The sum is about 80 percent of what the plaintiff had demanded. Judge Seo Myung-soo of the appellate court said that he held the client partially responsible for his money.
According to the court, in 1996, Choi asked a Daewoo dealer to place an order to buy shares in three companies for the previous day's closing price. Choi set the maximum amount of money available for the purchase at 30 million won from his deposits.
But the dealer didn't heed the client's instruction and used roughly 170 million for the purchases. The dealer even bought the shares at higher prices than the closing prices that Choi had asked for.
He sued the brokerage company after suffering from losses as a result of the dealer's "unwarranted" investments.
The district court ruled against the client, saying the company didn't need to pay any damages.
It also noted, "The dealer's wayward investing behavior should be criticized, but evidence is insufficient to prove that the company was responsible for overlooking the dealer."
But Seo of the appellate court found the company responsible for its failure to thoroughly monitor its employees.
On the ruling, Seo said, "Despite the fact it was not the first arbitrary investment by the dealer, the victim did not complain. Besides, the dealer fulfilled part of the client's instructions."