South Korean Financial Regulator Imposes $41 Million in Short Selling Fines

Synopsis

South Korea's financial regulator has fined global and local investors over $41 million for illegal short selling in two years. The country is preparing to lift its temporary ban on short selling at the end of this month, following investigations into multiple violations by various investment banks.

Key Takeaways

Fines exceeding 60 billion won imposed on investors
Temporary ban on short selling set to end soon
Ongoing investigations into global investors
Short selling previously limited to 350 firms
Concerns over U.S. tariffs affecting markets

Seoul, March 4 (NationPress) South Korea's financial regulator has imposed fines exceeding 60 billion won ($41 million) on both local and international investors for engaging in illegal short selling over the last two years, according to data released on Tuesday. The nation is poised to end its temporary suspension of this stock trading practice by the end of the month.

Data compiled by the Financial Supervisory Service (FSS) and presented to Rep. Lee Kang-il from the main opposition Democratic Party indicates that the regulatory body has levied a total of 63.5 billion won in fines across 58 cases of illegal short selling from March 2023 until last month.

This amount may continue to grow as the details of current measures under consideration have not been disclosed, according to reports from Yonhap news agency.

The FSS is currently investigating 14 global investors and aims to finalize its investigation before March 31, the date set for the resumption of short selling.

A temporary ban on the trading practice was enacted in November 2023 following multiple violations of naked short selling linked to various global investment banks.

Kim Byoung-hwan, the head of the Financial Services Commission (FSC), previously stated that regulators plan to permit short selling for all publicly listed companies in South Korea.

Before the ban, short selling was allowed only for 350 listed companies, specifically those included in the KOSPI 200 index and KOSDAQ 150 index.

Meanwhile, South Korean stocks dipped late on Tuesday after starting slightly higher, amid rising concerns regarding the upcoming implementation of U.S. tariffs on Canadian and Mexican products.

The benchmark Korea Composite Stock Price Index (KOSPI) fell by 3.2 points, or 0.13 percent, to 2,529.58 as of 11:20 a.m.

In the U.S., major stock indices dropped after President Donald Trump announced that 25 percent tariffs on goods from Mexico and Canada would go into effect as scheduled, raising fears of a potential global trade conflict.

The S&P 500 fell by 1.76 percent, while the tech-heavy Nasdaq tumbled by 2.64 percent, and the Dow Jones Industrial Average decreased by 1.48 percent.