Two investment banks were found to have violated regulations in South Korea and are expected to receive record fines from the country’s watchdog.
Two unnamed Hong Kong-based investment banks had engaged in naked short selling transactions, according to a statement by South Korea’s Financial Supervisory Service (FSS), which is banned in the country.
The two lenders had engaged in naked short selling totalling 40 billion won ($30 million) and 16 billion won, respectively, over different multi-month periods from 2020 to 2022. The violations are expected to result in record amounts of fines.
Naked short selling involves the shorting of securities without first borrowing them or determining they can be borrowed. Such activities are banned by the Capital Markets Act in South Korea.
