South Korea’s market watchdog announced on Monday that it had found violations of short-selling rules by seven more banks in the domestic stock market as part of a full-scale investigation into the trading practices of foreign investment banks, according to Reuters.
The country imposed a ban on short selling of stocks in the domestic market last November after it found illegal trading by two foreign firms in October and launched a special investigation to examine trading practices at other banks.
In interim investigation results released on Monday, the Financial Supervisory Service (FSS) reported that so far, nine out of 14 foreign investment banks, including two already fined, were identified with trading irregularities totalling 211.2 billion won ($154.76 million).
South Korean media reported on Thursday that financial authorities notified Credit Suisse AG it could face a fine of 50 billion won ($36.7 million) for the alleged short-selling violations.
The Capital Markets Act, passed in South Korea, prohibits “naked” short selling of stocks, in which an investor sells shares without first borrowing or determining the possibility of borrowing.
Last month, the watchdog prepared a new monitoring mechanism to better detect short-selling violations in the stock market. The authority stated that the ban on short selling, introduced in the first half of this year, would remain in place until adequate measures to prevent illegal trading were in place.
