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SEOUL (Reuters) – South Korea’s stock market regulator said on Sunday it found that two Hong Kong-based investment banks had engaged in short selling, which would likely result in record fines.
The two unnamed investment banks carried out short selling transactions totaling 40 billion won (US$29.58 million) and 16 billion won, respectively, the Financial Supervisory Service (FSS) said in a statement.
Short selling of shares, in which an investor shorts shares without borrowing them or determining whether they can be borrowed, is prohibited by South Korea’s Capital Markets Law.
The violations by global banks occurred over long periods, for nine months until May 2022 and five months until December 2021, respectively, and are expected to result in record amounts of fines, the FSS said.
The FSS said such violations, which run counter to authorities’ efforts to provide a more favorable environment for foreign investors, should be prevented from recurring and that it would also examine practices at other similar investment banks.
(1 dollar = 1,352.2100 won)
