SEOUL: The Financial Supervisory Service (FSS) of South Korea announced on Tuesday that it will inspect all global investment banks (IBs) operating in the country for illegal stock short selling practices.
According to Yonhap News Agency, a special task force will be formed for the purpose. The agency stated, "FSS will thoroughly hold accountable those engaged in the customary practice of illegal short selling by inspecting all IBs, so that there will no longer be any naked short selling." The announcement follows the FSS's exposure of two Hong Kong-based investment banks that allegedly engaged in illegal short selling activities over an extended period.
To restore market confidence, the FSS said it will take stern action against any illegal activities uncovered in the upcoming inspections and will work on system improvements to prevent future illegal short selling. The special investigation team will consist of 20 FSS officials, many of whom are experienced investigators and fluent in English. The FSS also stated that it would allocate sufficient resources and personnel for a swift and effective investigation of foreign investors.