• SK FSC imposed a fine of KRW 2.02bn on three hedge funds, after deciding that the trading behavior that occurred while block deal trading violated Capital markets act.
• Follows SK FSC, FSS November 2023 banned short selling until end-Jun. 2024.

Trading Violations

• For the first company (Company A), while negotiating a block deal price for shares of a domestically listed company, a sell swap order worth KRW 11.6bn was concluded.
• SK FSC believes that Company A had submitted the sell swap order before the transaction was agreed upon, with the intention of favoring the price of the block deal.
• Thus, it was determined that the resulting unfair profit was approximately KRW 3.2bn.
• In addition, Company A had submitted a naked short selling order in the process of selling its stocks, before information about the block deal transaction was made public.
• All three companies participated as buyers in the block deal transaction of Company A's stocks, and while the purchase price was set, they purchased Company A’s stocks before the block deal was disclosed, resulting in a sell swap order worth KRW 176.8bn.
• SK FSC determined that trading before the disclosure of this information constitutes an act of disrupting market order, and imposed a total fine of KRW 2.02bn on the firms.
• Financial companies are requested to make every effort to maintain and strengthen internal control systems and expand employee training, to prevent illegal practices.