Korea Fines Global Banks Record $20 Million for Illegal Naked Short Selling
The South Korean Financial Services Commission (FSC) has recently imposed a record fine of $20 million on global banks for illegal naked short selling. This is the largest fine ever imposed by the FSC on foreign financial institutions.
What is Naked Short Selling?
Naked short selling is a form of stock market manipulation in which traders sell shares they do not own. This is done in order to drive down the price of a stock, allowing the trader to buy it back at a lower price and make a profit. Naked short selling is illegal in many countries, including South Korea.
FSC’s Investigation
The FSC launched an investigation into the activities of global banks in South Korea in late 2020. The investigation revealed that the banks had engaged in illegal naked short selling of South Korean stocks. The FSC found that the banks had sold more than $1 billion worth of South Korean stocks without owning them.
FSC’s Response
In response to the investigation, the FSC imposed a record fine of $20 million on the global banks. The FSC also ordered the banks to cease all illegal activities and to take steps to prevent similar activities in the future.
Reaction from Banks
The banks have expressed regret for their actions and have agreed to pay the fine. They have also agreed to take steps to ensure that similar activities do not occur in the future.
Reaction from South Korean Government
The South Korean government has welcomed the FSC’s decision to impose a record fine on the global banks. The government has stated that it will continue to take steps to ensure that the financial markets are fair and transparent.
Impact on South Korean Stock Market
The FSC’s decision to impose a record fine on the global banks is likely to have a positive impact on the South Korean stock market. The decision will help to restore investor confidence in the market and will discourage illegal activities such as naked short selling.
Conclusion
The FSC’s decision to impose a record fine on global banks for illegal naked short selling is a welcome move. It will help to restore investor confidence in the South Korean stock market and will discourage similar activities in the future.