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Photo = FSS |
[Alpha Biz= Reporter Kim Sangjin] The Financial Supervisory Service (FSS) has identified two more global investment banks (IBs) involved in illegal short selling, adding to previous cases with BNP Paribas Securities, HSBC Securities, Credit Suisse (CS) affiliates, and Nomura Securities.
Illegal short selling refers to selling stocks without borrowing them first, which is prohibited in South Korea. While borrowed short selling is allowed, unborrowed short selling is illegal.
The FSS plans to discuss penalty levels for these newly identified IBs in the Capital Markets Investigation and Review Committee. The final sanctions will be determined by the Financial Services Commission (FSC) at its Securities and Futures Commission (SFC) meeting. Given that CS holds the record with a 27.1 billion KRW fine, there is speculation that these new penalties could set a new record.
However, the sanctioning process is expected to take years, as IBs often appeal, claiming excessive penalties. For instance, in August, Seoul Administrative Court ruled in favor of Kepler Cheuvreux S.A., a foreign financial firm, annulling an SFC fine. The SFC has since appealed the decision.
Meanwhile, the financial authorities confirmed their intention to resume short selling by March 31 of next year, following the establishment of a system to detect illegal activities. Currently, all borrowed short selling is suspended.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
