The court ruled in the first trial to cancel the fine imposed by the financial authorities, who claimed that illegal short selling had been committed.
According to the financial investment industry on the 28th, the Seoul Administrative Court recently ruled in favor of the plaintiff (Kepler Cheuvreux), a foreign financial company, in a lawsuit filed against the Securities and Futures Commission under the Financial Services Commission to cancel the fine.
The court found that Kepler Cheuvreux, which acted as an intermediary for orders between overseas asset managers and domestic securities firms, had no intention of conducting illegal short selling, and there were errors in calculating the short selling order amount.
The Securities and Futures Commission judged in September last year that Kepler Cheuvreux placed sell orders for 41,919 shares of SK Hynix common stock that it did not hold and imposed a fine of 1.063 billion won.
Short selling is an investment technique where shares that are not owned are borrowed and sold, and if the stock price falls, the shares are repurchased at a lower price to return the borrowed shares and realize a profit. According to domestic capital market laws, "borrowed short selling," which involves borrowing shares before selling, is allowed, but "naked short selling," which places sell orders without borrowing shares in advance, is illegal.
Since April 2021, with the amendment of the Capital Market Act, if caught engaging in naked short selling, fines of up to 100% of the illegal short selling order amount can be imposed. This increased the penalty level from the previous fine of up to 10 million won.
The financial authorities will review the court ruling and decide whether to appeal.
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