Lee Bok-hyun "Inspection of Securities Firms with Concentrated Short Selling"

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] On the 16th, Lee Bok-hyun, Governor of the Financial Supervisory Service, stated, "We are preparing measures for on-site inspections and investigations targeting institutions and securities firms where short selling is concentrated during the stock market downturn."

Governor Lee held a meeting with the press secretariat in the afternoon and said, "I wonder why short selling orders are concentrated on stocks held by specific securities firms or through certain trading desks. If many other market participants engage in short selling, such concentration should not occur."

Following the recent violation of short selling regulations by Korea Investment & Securities, criticism of short selling has spread, prompting the government to strengthen inspections and investigations into illegal short selling.

Governor Lee explained, "We have received dozens of cases related to naked short selling and illegal short selling from the stock exchange," adding, "Regardless of the severity of sanctions, we must strictly punish market manipulation acts. Since taking office, we have been preparing to handle unfair market manipulation activities that have generated significant profits." He further stated, "We are allocating concentrated manpower, reflecting the perspectives of the prosecution and the Financial Services Commission, and if necessary, we are consulting with the prosecution about fast-track (expedited investigation) cases."

However, regarding recent allegations of nominee trading involving former Meritz Asset Management CEO John Lee and former Asset Plus Asset Management CEO Kang Bang-cheon, he emphasized, "There are no plans for inspections of asset management companies in general." Governor Lee recently cited the proverb 'Ihabujeonggwan (李下不整冠 - Do not adjust your hat under a plum tree)' during an executive meeting, stressing, "Any inappropriate behavior that could raise suspicions of conflicts of interest or misuse of job-related information must be refrained from."

Regarding this, Governor Lee explained, "The issue arose from specific individuals or a few asset management companies, but I thought it could potentially spread if handled carelessly, so I sent a message advising caution."

He also commented on the Lime Asset Management scandal, stating, "We are cooperating mainly with the prosecution's investigation, and we will not deliberately avoid addressing any systemic issues that may be identified during the process."