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Global investment bank Credit Suisse affiliates have been fined a record amount for violating Korea's short selling regulations.
The Securities and Futures Commission under the Financial Services Commission announced that it had decided to impose fines totaling 27.17 billion won ($19.5 million) on two affiliates of UBS AG -- formerly Credit Suisse -- for illegal short selling amounting to 100 billion won discovered earlier this year.
This is the largest fine imposed since the penalty system for naked short selling was implemented in April 2021. In terms of the individual fines -- 16.9 billion won for Credit Suisse AG and 10.23 billion won for Credit Suisse Singapore -- they are the highest and third-highest amounts ever imposed, respectively.
The violations involved selling loaned securities to third parties without timely recall, with Credit Suisse AG engaged in illegal short selling of approximately 60.33 billion won in the Korean stock market from April 2021 to June 2022, and Credit Suisse Singapore illegally shorting stocks worth 35.28 billion won from November 2021 to June 2022.
The Capital Markets Act prohibits naked short selling, where stocks are sold without proper borrowing or confirmation of availability.
The commission also announced it decided to fine six local and global financial firms and one individual investor a total of 284.2 million won for violations in reporting and disclosing short positions last month.
According to the FSC, fines totaling 63.56 billion won have been imposed in 42 cases for violations related to naked short selling. The fines imposed on three global banks identified in the ongoing Financial Supervisory Service investigation alone amount to 53.7 billion won, representing 85 percent of the total fines levied.
