Financial Supervisory Service launches special investigation team to impose strict penalties on illegal short selling - South Korea

South Korea's Financial Supervisory Service will begin a complete investigation into approximately 10 global investment banks (IBs) from the 6th to uncover illegal short selling transactions. Lee Bok-hyun, Financial Supervisor
At a press conference on the 5th, the Director-General said, ``On the 6th, we plan to launch a short-selling special investigation team with 20 people.We are currently conducting investigations into some global IBs.'' against illegal activities
"We will apply the zero-tolerance principle, including maximum fines and criminal penalties, and punish them strictly." Last month, the Financial Supervisory Service examined the organizational and practices of global IBs BNP Paribas and HSBC.
This was the first time that illegal short selling was uncovered. Mr. Lee is working to ensure that Global IB's naked short selling (short selling without borrowing the underlying stock) does not happen again.
He explained that it will lead to unique system improvements. The company also announced plans to investigate South Korean securities companies that receive short selling orders to see if there are any legal compliance or operational issues.
Regarding the complete ban on short selling until the end of the first half of next year, Mr. Lee said, ``Investigations into illegal short selling will continue even during the ban period,'' adding, ``There is a possibility that short selling will emerge as a result of the short selling ban.''
We will work closely with exchanges to monitor any unfair trading practices such as market manipulation." Regarding exceptionally allowing short selling to market creators during the prohibited period,
"We will monitor the situation to ensure that it does not obstruct fair price formation."