South Korea’s financial watchdog said it has so far uncovered 211.2 billion won (US$156 million) worth of illegal short trades by nine global investment banks, providing its latest formal update on a probe that began late last year.
The nine banks, whose names were not disclosed, violated mostly procedural rules while collectively shorting 164 stocks, a Financial Supervisory Service (FSS) briefing said. It is continuing to probe five other banks in the matter.
Two of the nine banks are already facing penalties imposed by the financial authorities and have been referred to prosecutors for further investigation for allegedly violating the nation’s capital markets law, FSS Senior Deputy Governor Hahm Yong-il told reporters on Friday. The watchdog plans to review penalties on the other seven banks.
Photo: AP
Activities of global banks and hedge funds have come under increased scrutiny in recent months in South Korea, as authorities boost steps to weed out naked short selling — a practice of selling shares without even borrowing them first. While short selling remains legal in many markets, it is a contentious political issue in the emerging Asian nation, with its powerful retail investors often blaming it for stock declines.
Describing the practice as “rampant,” authorities in November last year imposed a ban on all forms of short-selling until the end of next month, inviting criticism from some investors that the move would hurt the market’s appeal among global funds.
At the same time, a special team was formed to probe all short-selling activities by major global investment banks since May 2021 — when South Korea partially lifted a pandemic-era ban and allowed the resumption of short selling in stocks on the KOSPI 200 Index and the KOSDAQ 150 Index.
Most short-selling trades by global banks in South Korea are aimed at hedging their swap contracts with their end clients, the FSS said.
Europe-headquartered banks committed more breaches compared to those based in the US, and most trades under investigation were conducted from their Hong Kong offices, Hahm said. FSS officials plan to visit Hong Kong later this month to update global banks on South Korea’s regulations related to short-selling.
Overall, the 14 banks being probed by authorities accounted for 90 percent of short-selling trades by overseas firms in the country, the FSS said.
Regulators are also developing a platform to monitor short-selling that can help identify illegal transactions, it said.
The probe launch came after authorities in October last year accused two global banks of “routinely and intentionally” breaching short-selling rules in trades totaling 56 billion won. Then in December, BNP Paribas SA and HSBC Holdings PLC were fined by regulators for claims tied to short selling.
In March, HSBC’s Hong Kong unit and three of its traders were indicted by prosecutors. Credit Suisse Group AG, which was acquired by UBS Group AG, is also facing a fine, South Korean media reported earlier this month.
SEMICONDUCTORS: The firm has already completed one fab, which is to begin mass producing 2-nanomater chips next year, while two others are under construction Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, plans to begin construction of its fourth and fifth wafer fabs in Kaohsiung next year, targeting the development of high-end processes. The two facilities — P4 and P5 — are part of TSMC’s production expansion program, which aims to build five fabs in Kaohsiung. TSMC facility division vice president Arthur Chuang (莊子壽) on Thursday said that the five facilities are expected to create 8,000 jobs. To respond to the fast-changing global semiconductor industry and escalating international competition, TSMC said it has to keep growing by expanding its production footprints. The P4 and P5
DOWNFALL: The Singapore-based oil magnate Lim Oon Kuin was accused of hiding US$800 million in losses and leaving 20 banks with substantial liabilities Former tycoon Lim Oon Kuin (林恩強) has been declared bankrupt in Singapore, following the collapse of his oil trading empire. The name of the founder of Hin Leong Trading Pte Ltd (興隆貿易) and his children Lim Huey Ching (林慧清) and Lim Chee Meng (林志朋) were listed as having been issued a bankruptcy order on Dec. 19, the government gazette showed. The younger Lims were directors at the company. Leow Quek Shiong and Seah Roh Lin of BDO Advisory Pte Ltd are the trustees, according to the gazette. At its peak, Hin Leong traded a range of oil products, made lubricants and operated loading
Citigroup Inc and Bank of America Corp said they are leaving a global climate-banking group, becoming the latest Wall Street lenders to exit the coalition in the past month. In a statement, Citigroup said while it remains committed to achieving net zero emissions, it is exiting the Net-Zero Banking Alliance (NZBA). Bank of America said separately on Tuesday that it is also leaving NZBA, adding that it would continue to work with clients on reducing greenhouse gas emissions. The banks’ departure from NZBA follows Goldman Sachs Group Inc and Wells Fargo & Co. The largest US financial institutions are under increasing pressure
STIMULUS PLANS: An official said that China would increase funding from special treasury bonds and expand another program focused on key strategic sectors China is to sharply increase funding from ultra-long treasury bonds this year to spur business investment and consumer-boosting initiatives, a state planner official told a news conference yesterday, as Beijing cranks up fiscal stimulus to revitalize its faltering economy. Special treasury bonds would be used to fund large-scale equipment upgrades and consumer goods trade-ins, said Yuan Da (袁達), deputy secretary-general of the Chinese National Development and Reform Commission. “The size of ultra-long special government bond funds will be sharply increased this year to intensify and expand the implementation of the two new initiatives,” Yuan said. Under the program launched last year, consumers can
RSS