South Korean Regulator Fines Global Investors $55 Million for Illegal Short Selling
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Synopsis
South Korea's financial watchdog has fined global investors over $55 million for illegal short selling, just before lifting its temporary ban on the practice at the end of March. The FSS has concluded a lengthy investigation and plans to permit short selling across all publicly traded companies.
Key Takeaways
- Fines of 80 billion won issued for illegal actions.
- The short selling ban is set to be lifted on March 31.
- A 16-month investigation targeted 14 global investment banks.
- South Korean shares saw an increase of 1.5 percent on Wednesday.
- The local currency strengthened against the dollar.
Seoul, March 12 (NationPress) South Korea's financial regulatory body announced on Wednesday that it has imposed fines exceeding 80 billion won ($55 million) on international investors for engaging in illegal short selling. This move comes as the country prepares to lift its temporary ban on the stock trading practice by the end of this month.
The Financial Supervisory Service (FSS) reported that the Futures and Securities Committee under the Financial Service Commission (FSC) has concluded a thorough 16-month investigation into alleged illegal short selling activities involving 14 global investment banks (IBs), resulting in a total of 83.6 billion won in fines imposed on 13 IBs.
The temporary ban was instituted in November 2023 following the discovery of multiple naked short selling violations by various global investment banks, as noted by the Yonhap news agency.
Earlier, the financial regulator indicated plans to permit short selling across all publicly traded companies within the country.
Prior to the short selling ban, only 350 listed companies, specifically the constituents of the KOSPI 200 index and the KOSDAQ 150 index, were eligible for short selling.
The ban is scheduled to be lifted on March 31.
The FSS has been reviewing activities of 14 global investors and aims to finalize its inquiry before March 31, when short selling is set to resume.
In the meantime, South Korean stocks rose by nearly 1.5 percent on Wednesday, as investors capitalized on semiconductor and battery shares despite losses on Wall Street the previous night. The local currency strengthened significantly against the US dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) increased by 37.22 points, or 1.47 percent, closing at 2,574.82.
Foreign and institutional investors collectively purchased a net 411.6 billion won, while retail investors sold off a net 503.6 billion won.
