[Alpha Biz=(Chicago) Reporter Kim Jisun] The Financial Supervisory Service will conduct a full survey of illegal short stock selling targeting the top global investment banks (IB) in Korea.

The Financial Supervisory Service said on the 31st that it will set up a 20-member special investigation team on public sales, which includes those with experience in investigating public sales in the floor, English proficiency and IT experts as of Nov. 6. The plan is to expand and reorganize the short stock selling survey, which was conducted on a team basis, to focus more on the short stock selling history of foreign investors and institutions.

In addition to the existing short-selling survey centered on overheated short-selling stocks, the FSS will shift its investigation paradigm by setting large institutions such as Merrill Lynch, JP Morgan and Morgan Stanley, which hold a large balance of local stocks, and focusing on their major transactions. As tens of billions of won worth of illegal short selling by large global IBs such as BNP Paribas and HSBC have recently been caught, the government will crack down on non-borrowing short selling without borrowing stocks. The Financial Supervisory Service is said to have detected some IB illegal short selling and launched further investigations.

The Financial Supervisory Service will also closely look into whether domestic securities firms that are entrusted with global IB short-selling orders will fulfill their orders. It plans to check the timing and process of the actual implementation of securities firms following short selling orders and repayment of global IBs, as well as the possibility of illegal short selling orders. From next year, international investigations in cooperation with foreign financial authorities such as the Hong Kong Securities and Futures Commission (SFC) and the Monetary Authority of Singapore (MAS) are also scheduled.

 

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