Barclays and Citi are accused of illegal short selling as part of the FSS investigation

Audio report: Written by reporters, read by AI

The headquarters of the Financial Services Commission is located in the government complex in Jongno District in central Seoul [NEWS1]

The Financial Supervisory Service (FSS) has uncovered additional cases of naked short selling by two global investment banks, reportedly Barclays and Citi, as part of the ongoing crackdown on illegal trading practices in Korea.

A Capital Markets Investigation and Review Advisory Committee of the Financial Services Commission (FSC) is currently investigating the recently emerged allegations, the FSS confirmed on Tuesday according to media reports.

However, the financial regulator did not confirm the names of the alleged perpetrators or the amount of investments.

Cases are referred to the Securities and Futures Commission (SFC) under the FSC, which is responsible for determining the scope of possible penalties. According to the tax authorities, details of the cases will be published following a decision by the SFC.

In July, the FSC fined the former Credit Suisse AG, which merged with UBS AG in May, 16.9 billion won ($12 million) for illegally short-selling 60.3 worth of shares Billion won from April 2021 to June 2022. Credit Suisse Singapore was fined 10.2 billion won for illegal short trading worth 35.3 billion won from November 2021 to June 2022.

BNP Paribas and BNP Paribas Securities in Korea were fined a total of 19 billion won, while HSBC was fined 7.5 billion won last year.

Naked short selling, or selling stocks without first borrowing them, is illegal in many countries, including Korea. Seoul introduced a temporary ban on all short selling in November to stamp out naked short selling. This ban was extended until March 2025 after illegal short selling at global investment banks was uncovered.

FSC Vice Chairman Kim So-young told the press on Monday: “We will try our best to constantly communicate with foreign investors in the follow-up process as they have asked for clarification during the process of changing the short selling regulations.” This The ban is scheduled to expire on March 31st.

BY SHIN HA-NEE [[email protected]]