Tense Atmosphere in the Short Selling Market... "Please Investigate Speculative Stocks" Petition Submitted to the Financial Services Commission

Kyungsillyeon Submits Petition with 3,598 Shareholder Signatures to Financial Services Commission
Urges Investigation into Market Manipulation and Re-lending Transactions in 43 Stocks
Individual Investors Continue Short Selling Protests Including 'K-Stop' Movement

[Asia Economy Reporter Ji Yeon-jin] Individual investors continue to express opposition to short selling. Although short selling, an investment technique that bets on stock price declines using borrowed shares, has been partially resumed since May 3rd and is evaluated to have a limited impact on the stock market, complaints are growing that short selling transactions, increasing around certain stocks, are holding back stock prices.

The Citizens’ Coalition for Economic Justice (CCEJ) announced on the 5th that it sent a petition signed by 3,598 shareholders to Eun Sung-soo, Chairman of the Financial Services Commission, urging an investigation into the illegality of short selling transactions in 43 stocks with heavy short selling activity. Among the signatories, HMM shareholders were the most numerous with 1,176 participants, followed by Celltrion Healthcare (809) and Samsung Electronics (651).

The petition calls on the Financial Services Commission to inspect the 43 stocks for ▲ market order disruption acts such as price manipulation aimed at downward pressure from short selling ▲ securities lending transactions ▲ bid price collusion ▲ transactions through nominee accounts ▲ violations of the uptick rule ▲ collusive trading ▲ stock lending by controlling shareholders and unfair trading ▲ participation in illegal paid-in capital increases.

According to a survey conducted by CCEJ targeting these shareholders, 59.3% of the 2,114 respondents identified the improvement of the unfair short selling system as a key demand. In particular, many called for the short selling repayment period for institutions and foreigners to be set at 60 days, the same as individuals, or to be designated in 3, 6, or 12-month intervals among institutions as in advanced countries. Thirty-three percent of respondents complained of damages caused by bid collusion, volume speculation, and price manipulation by short selling forces. Furthermore, 57.3% responded that the Financial Services Commission should be disbanded if the short selling system is not improved.

CCEJ explained, "We are asking for an investigation into whether the price discovery function of short selling, which should form appropriate prices through multiple market participants, is instead undermining the fairness and efficiency of the entire stock market due to speculative trading by a few operators and unfair trading by major shareholders."

Meanwhile, the Korea Stock Investors Union, a group of individual investors, announced that it will launch a ‘Korean version of GameStop (K-Stop)’ movement around the 10th of this month, following the campaign on the 15th of last month, to raise stock prices in opposition to short selling. The Financial Services Commission urged restraint, stating that such concentrated buying is a market order disruption act that artificially manipulates stock prices.

This content was produced with the assistance of AI translation services.