Financial Services Commission uncovers 11 asset management and securities firms violating short-selling regulations

10 Companies Including Shinhan Asset Management Fined for Delayed Short Selling Reports

On the 9th, officials were busy moving in the corridor of the Financial Services Commission at the Government Seoul Office in Jongno-gu, Seoul, where the financial authorities decided to include mortgage loans (Judaemdae) in the 'debt refinancing' infrastructure scheduled to be launched in May by the end of the year. The financial authorities explained that they aim to reduce the interest burden on mortgage loans by establishing a debt refinancing platform that allows users to compare loan interest rates across the financial sector at a glance and switch loans easily. Photo by Yoon Dong-ju doso7@

The financial authorities have imposed fines on financial firms that violated short-selling regulations. This time, not only domestic but also foreign financial firms were caught, indicating that the monitoring of illegal short selling is expected to be further strengthened.

The Financial Services Commission’s Securities and Futures Commission (SFC) imposed a total fine of 205.5 million KRW on 10 companies, including Deutsche Bank, Macquarie Bank, SK Securities, and Shinhan Asset Management, for delayed reporting and disclosure violations of net short-selling positions at its 13th regular meeting.

In addition to financial firms, an individual named Park was also caught for the same violation and was notified of a fine of 16.1 million KRW.

Among the financial firms, Shinhan Asset Management was fined the most at 70.5 million KRW. Macquarie Bank was fined 54 million KRW, Kiwoom Bank 31.5 million KRW, Hanyang Securities 30 million KRW, SK Securities and Nova Scotia Asia Bank each 24 million KRW, C Square Asset Management 12 million KRW, HSBC Bank plc and Deutsche Bank 7.5 million KRW, and Bookook Securities 6 million KRW.

Deutsche Bank was caught for delayed reporting of net short-selling positions on 3 stocks in January 2021, and Macquarie Bank was caught for delayed reporting on 192 stocks in November 2018 and September 2019.

Shinhan Asset Management delayed reporting net short-selling positions on 45 stocks over 10 days from September 2018 to January last year. Hanyang Securities was pointed out for delayed disclosure of net short-selling positions on one stock in December 2018.

The SFC notified Kepler Schroe of a penalty of 1.063 billion KRW in September 2021 for violating short-selling restrictions by placing sell orders for 41,919 shares of SK Hynix common stock that the fund did not own.

As short-selling issues persist, the Financial Supervisory Service (FSS) convened compliance officers of foreign securities firms on the 7th to order strengthening of internal controls to prevent illegal short selling.

The FSS emphasized the need for foreign securities firms to check short-selling order processes such as position management and stock borrowing, improve internal control systems, and provide training to related employees to prevent short-selling violations.

The FSS plans to strictly inspect the appropriateness of securities firms’ short-selling order acceptance and processing during future investigations and examinations.

Meanwhile, the Financial Services Commission’s SFC imposed a penalty of 113.9 million KRW on Standard Chartered Bank Korea for violating the obligation to submit a securities registration statement, and a penalty of 195.5 million KRW on Zenen Bio for violating the obligation to submit a major event report.

Aegis Asset Management was notified of a fine of 54 million KRW for failing to submit regular reports such as derivative trading status within one month from the reporting date. Some employees of KB Asset Management, Midas Asset Management, and Asset Plus Asset Management were fined for violating financial investment product trading regulations.

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