As financial authorities show a hard-line stance against illegal short selling, they imposed a total of 3.97 billion won in penalty surcharges on six domestic asset managers and foreign financial firms. Since short selling resumed in March last year, there have been cases of small penalty surcharges, but this is the first time that large-scale sanctions worth billions of won have been imposed all at once.
According to the financial investment industry on the 19th, the Securities and Futures Commission under the Financial Services Commission imposed a 370.6 million won penalty surcharge on Shinhan Asset Management on Oct. 15 last year on suspicion of violating short-selling regulations. It was caught selling 5,000 shares of EcoPro that it did not hold (worth about 1.85 billion won) on Mar. 14, 2023.
Among foreign financial firms, Norway's Pareto Securities received the largest sanction. The company violated short-selling regulations by selling about 178,000 common shares of Samsung Electronics that it did not hold (about 10.9 billion won) in Nov. 2022, and was hit with a 2.2626 billion won penalty surcharge.
In addition, ▲ Canada Alberta Investment Management (546.9 million won) ▲ United States Invesco Capital Management (532.3 million won) ▲ Northern Trust Hong Kong (141.7 million won) ▲ Singapore GIC Private Limited (120.6 million won) were included among those subject to penalty surcharges.
The sanctions were approved in Oct. last year, but became known belatedly as financial authorities went through the process of disclosing the real names of those sanctioned on their website. In particular, many of these cases were reportedly uncovered through a full-scale probe into illegal short selling targeting global investment banks (IBs) conducted ahead of the full resumption of short selling (Nov. 2023–Mar. 2024).
Currently, financial authorities operate the real-time naked short-selling detection system (NSDS) and are continuously monitoring short-selling transactions. With the imposition of these large penalty surcharges, observers say authorities are maintaining their stance of strict response to illegal short selling.
Short-selling regulations are cited as one of the key issues as Korea's stock market seeks inclusion in the Morgan Stanley Capital International (MSCI) developed markets index. After short selling fully resumed in Mar. last year, MSCI raised its assessment of short-selling accessibility in the Korean market from "minus (needs improvement)" to "plus."