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(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Sangjin] The government has imposed fines exceeding 27.1 billion KRW on two former Credit Suisse subsidiaries, now part of UBS AG, for illegal naked short selling. This violation involved borrowing stocks between affiliated companies within the same group, treating them as owned before confirming their return, and subsequently placing unauthorized short selling orders.
On the 3rd, the Securities Futures Commission under the Financial Services Commission announced that it has decided to impose fines of 16.9439 billion KRW (the highest ever) on Credit Suisse AG and 10.2291 billion KRW (the third highest) on Credit Suisse Singapore, totaling 27.173 billion KRW. This marks the highest level of fines since the introduction of regulations against naked short selling in 2021.
The government explained that these global investment banks violated regulations by selling securities to third parties while failing to promptly request repayment from the borrowers, thus engaging in illegal short selling. Despite current capital market laws prohibiting naked short selling, transactions where securities are sold before the return is confirmed are not considered short selling if there are no concerns about non-payment upon settlement. However, in this case, delayed requests for repayment of borrowed securities led to concerns about non-payment, hence it was deemed as illegal naked short selling.
Government officials emphasized the need for thorough management and operation of balance management systems, as even negligence or lax management by financial institutions can result in significant fines for violations of short selling regulations.
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
