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[Alpha Biz=(Chicago) Reporter Paul Lee] Prosecutors have launched a forced investigation into BNP Paribas and HSBC, which are suspected of illegal short selling by global investment banks.
Borrowed short selling refers to short selling without borrowing stocks in advance. It is a kind of credit transaction that sells and then lends shares later. Under Article 180 of the Capital Markets Act, all public sales are prohibited except for "short selling using stocks borrowed in advance" (borrowing short selling).
According to legal circles on the 16th, the Financial Investigation Department 1 (chief prosecutor Kwon Chan-hyuk) and the Financial Investigation Department 2 (chief prosecutor Park Kun-young) at the Seoul Southern District Prosecutors' Office have sent prosecutors and investigators to three BNP Paribas Securities, HSBC Securities and HSBC Bank to conduct a seizure search since this morning. These companies are accused of violating the Capital Markets Act.
According to the Financial Supervisory Service, which first uncovered the charges in October last year, BNP Paribas's Hong Kong subsidiary conducted a naked public sale worth 40 billion won on 101 stocks, including Kakao, from September 2021 to May 2022. Hong Kong's HSBC conducted naked short selling worth 16 billion won on nine stocks, including Hotel Shilla, from August to December 2021.
The Securities and Futures Commission of the Financial Services Commission imposed a total of 26.52 billion won in fines on both companies and handed them over to the prosecution. The fines imposed by the Financial Services Commission are the largest since the introduction of a penalty system in 2021 for violating restrictions on short selling.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
