Global IB Full Survey Launched in October Last Year
Announcement Scheduled on Illegal Short Selling Scale and Details
The Financial Supervisory Service (FSS) is set to announce the interim results of its comprehensive investigation into illegal short selling by foreign investment banks (IBs) as early as the 3rd of next month.
According to financial authorities on the 30th, the FSS is currently compiling the "Interim Results of the Global IB Illegal Short Selling Investigation." The interim results will be announced on the 3rd of next month, along with an explanation of the remaining procedures. Ham Yong-il, Deputy Governor of the FSS in charge of the capital markets and accounting divisions, will conduct the briefing personally, accompanied by Deputy Governor Kim Jeong-tae and the Special Investigation Team on Short Selling.
Previously, in October last year, the FSS first uncovered large-scale illegal short selling practices routinely conducted by global IBs. Subsequently, the Special Investigation Team on Short Selling was launched, and a comprehensive investigation targeting global IBs commenced. Ten global IBs ranked highest in domestic short selling transactions were selected, and investigations were conducted by extracting stocks and periods with a high likelihood of violations.
In January this year, the FSS additionally detected large-scale illegal short selling by two global IBs. As part of this effort, the FSS Special Investigation Team visited Hong Kong in February to meet with local financial authorities such as the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA). This was based on the judgment that cooperation from Hong Kong financial authorities is essential for investigating illegal short selling by global IBs.
The FSS believes there is a high likelihood that violations similar to the large-scale illegal short selling detected this time have occurred, and is expanding the scope of stocks and periods under investigation. Sanction procedures will be carried out sequentially starting with completed investigations, and the FSS plans to appropriately utilize interim result announcements as necessary during the investigation process to ensure the public's right to know and protect investors.
Meanwhile, last week, following the conclusion of the '2nd Short Selling Forum' with individual investors, FSS Governor Lee Bok-hyun previewed in a back briefing that the interim status of the investigation into illegal short selling by foreign IBs would be announced as early as early May.
Governor Lee said, "We plan to organize what was discussed in February and March and make a second announcement in early to mid-May," adding, "At this stage, it seems appropriate to summarize the investigation status once and inform the public." He further explained, "This can be seen as one element necessary for judgment regarding the overall situation related to the systems we are preparing, awareness of reality, and the resumption of short selling."
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