• SK FSC, SK FSS said Securities and Futures Commission had decided to impose fines totaling KRW 27.173 against two former Credit Suisse affiliated investment banks.
• Follows SK FSS May 2024 discovered illegal short selling in 9 global IBs.

Overview of Findings

• UBS AG, formerly Credit Suisse AG, was found to have engaged in naked short sales worth KRW 60.33bn without processing stocks at the time of placing short selling orders.
• Credit Suisse Singapore had also engaged in naked short selling worth KRW 35.28bn.
• The trading activities above were deemed naked short sales in violation of the Capital markets act; as the two investment banks' recall of loaned securities was delayed, borrowers' securities return deadline was later than settlement date (T+2).
• The Commission also found 4 domestic financial investment businesses, Anda, Astra, Aone, and Owl Asset Management, had violated the duty to report and disclose net short selling balance as per article 180-2 and 180-3 of the Capital markets act.
• As well as Merrill Lynch International and Daiwa Capital Markets Europe Limited.

Record-High Penalty Surcharges

• The Commission decided to impose record-high penalty surcharges against Credit Suisse AG (KRW 16.94bn), Credit Suisse Singapore (KRW 10.23bn) on 3 July 2024.
• Also imposed a total of KRW 284.2mn fine for negligence against the six domestic and foreign financial investment businesses, and one individual investor, on 19 June 2024.

Plan

• The financial authorities will strictly respond to unfair trades, e.g. naked short selling.