After discovering unlawful dealing by two foreign companies in October, South Korea banned short selling of stocks on the local market and launched a special investigation to examine trading practices at different banks.
In its interim investigation results released on Monday, the Financial Supervisory Service ( FSS) said it had so far found illegal trading by nine banks, including two that have already been fined, out of 14 foreign investment banks, with trading violations totalling 211.2 billion won ( US$ 154.76 million ).
The another five were still being investigated, the FSS said, without naming any of them.
Credit Suisse AG may be subject to fines of up to 50 billion won over claims it broke short-selling laws, according to a report from South Korea’s Chosun Ilbo newspaper on Thursday.
According to the report, citing industry sources, the notice was sent to the bank’s North Vietnamese and Malaysian divisions.
The FSS and UBS, which took over Credit Suisse in 2023, declined to comment on the document.
The Capital Markets Act prohibits “naked” small trading of stocks in South Korea, whereby an entrepreneur shortsells stocks without having to either obtain a loan from the government or decide whether they can be borrowed.
The FSS stated that it is working with Hong Kong’s authorities to finish its investigation and that it will hold a meeting there this month to discuss South Korea’s short-selling laws.
The regulator released a new surveillance system last month to make it easier to identify short-selling violations in the stock market.
The short-selling restrictions, which was put in place through the first quarter of this year, will continue until suitable measures are put in place to stop illegal trade, according to South Korea.