The Financial Services Commission’s Securities and Futures Commission announced on July 3 that it had voted to levy the fines against CSAG (now UBS AG) and CSSL, both former affiliates of Credit Suisse Group. (Image from Credit Suisse Group webpage)
SEOUL, July 3 (Korea Bizwire) – South Korean financial regulators have imposed a record fine of 27.1 billion won on two subsidiaries of a global investment bank for illegal short-selling practices involving transactions worth approximately 100 billion won.
The Financial Services Commission’s Securities and Futures Commission announced on July 3 that it had voted to levy the fines against CSAG (now UBS AG) and CSSL, both former affiliates of Credit Suisse Group.
This marks the largest penalty imposed since the introduction of fines for naked short selling in April 2021, surpassing the previous record of 16.9 billion won.
According to the commission, CSAG submitted sell orders for 162,365 shares of 20 companies valued at about 60.3 billion won between April 7, 2021, and June 9, 2022, without owning the stocks.
Similarly, CSSL placed sell orders for 401,195 shares of five companies worth approximately 35.3 billion won from November 29, 2021, to June 9, 2022.
The firms violated short-selling regulations by selling stocks that were on loan to affiliates within the same financial group or other securities firms before the return of these shares was confirmed.
They also sold borrowed shares to third parties and only requested early redemption from borrowers the following day.
The commission determined these actions constituted naked short selling, as there was a risk of settlement failure due to the uncertainty of share returns by the settlement date.
However, the final penalty was reduced from the initially proposed 50 billion won, taking into account that no actual settlement failures occurred and there was no market impact.
In a separate decision on June 19, the commission also imposed fines totaling 284.2 million won on six domestic and foreign financial investment firms and one individual investor for violating reporting and disclosure obligations related to short-selling net positions.
M. H. Lee (mhlee@koreabizwire.com)
