South Korea plans to impose a total fine of 26.5 billion won (US$20.4 million) on BNP Paribas SA, its domestic brokerage unit and HSBC Holdings PLC for naked short-selling, a person familiar with the matter said.
BNP Paribas was ordered to pay 11 billion won for naked short-selling, which is illegal in South Korea, while its local brokerage unit was penalized 8 billion won, the person said, speaking on condition of anonymity.
HSBC was fined 7.5 billion won for naked short-selling, the person said.
Photo: AP
The South Korean Financial Services Commission (FSC) yesterday said it would impose record-high fines on two global banks and one of the firms’ local units, without identifying their names or the breakdown of the penalties.
“The violations were a grave matter that hurts the market order and investor trust,” the South Korean Securities and Futures Commission, which functions under the FSC, said in a statement following its decision.
The naked short-selling transactions by the three parties, which lasted for months, were viewed to be “intentional,” it added.
The FSC also plans to ask prosecutors to investigate the two international investment banks.
South Korea’s decision is the latest in efforts by authorities to weed out illegal short-sellers from the local stock market, and comes after authorities last month announced a full ban on short-selling until the end of June next year.
The FSC recently slapped a combined fine of 2 billion won on three unnamed global hedge funds for contraventions of capital markets law, including illegal short-selling and unfair trades. Bloomberg News has reported that one of the funds was Segantii Capital Management Ltd.
Public perception of short-sellers in South Korea remains deeply negative, with local retail traders having staged protests against these activities. They have also made sporadic coordinated attempts to drive gains in stocks targeted by short-sellers, leading to an increase in volatility.
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