Seoul: South Korea’s Financial Regulator Identifies Additional Suspected Cases of Naked Stock Short Selling
On Monday, South Korea’s financial regulator announced the discovery of suspected instances of naked stock short selling at five additional global investment banks (IBs), bringing the total to nine out of the country’s 14 largest global IBs.
These newly identified cases follow reports from the Financial Supervisory Service (FSS) in January, revealing suspected illegal stock short-selling activities at two global IBs, as reported by Yonhap news agency.
Since exposing two IBs suspected of engaging in naked stock short selling totaling 55.6 billion won ($40.3 million) between 2021 and 2022, the FSS has been conducting comprehensive inspections on all 14 global IBs operating in the country.
In response to these findings, the financial regulator, in collaboration with the Financial Services Commission, instituted a temporary ban on stock short selling, slated to expire at the end of the upcoming month.
The FSS reported, “It has completed imposing fines (totaling 26.5 billion won) on the first two companies found to have engaged in illegal stock short selling, totaling 55.6 billion won, and referred them to the prosecution.” Additionally, it stated, “While conducting inspections of all global IBs, it has uncovered illegal short selling by seven additional companies, totaling 155.6 billion won.”
The ongoing inspection on the remaining five global IBs is still in progress, according to the FSS.
The financial regulator affirmed its commitment to promptly undertake punitive measures upon confirmation of the naked stock short selling allegations.
