Seoul - South Korea's Financial Supervisory Service (FSS) announced Monday that it has identified suspected cases of illegal naked short selling at five additional global investment banks (IBs), raising the total number of implicated firms to nine out of the 14 major global IBs operating in the country.
According to Yonhap News Agency, these new cases were discovered during ongoing inspections that began after the initial detection of similar activities at two banks earlier this year. In total, these investigations have now uncovered illegal short selling practices involving transactions worth 155.6 billion won (approximately $112.8 million). The FSS had previously imposed fines totaling 26.5 billion won on the first two banks for illegal transactions worth 55.6 billion won and referred those cases to the prosecution.
The regulator, in collaboration with the Financial Services Commission, had implemented a temporary ban on stock short selling, which is set to expire at the end of next month. The FSS is still conducting inspections on the remaining five global IBs and stated that punitive measures would be taken swiftly if the allegations are confirmed.
In addition to these measures, the FSS plans to hold a meeting in Hong Kong with global IBs before the end of this month. The purpose of the meeting is to explain South Korea's stock short-selling regulations and discuss potential changes expected once the temporary ban is lifted.