S.Korea mulls fines on Barclays and Citi for short-sale violations, with financial authorities considering record-high fines of up to 90 billion won ($64.3mn) for naked shorting, writes Korea Economic Daily.
A lower committee under the Financial Services Commission (FSC) is reviewing the result of the Financial Supervisory Service (FSS) investigation, said a Korean financial authority official familiar with the matter: “They are deliberating over whether to impose a fine of up to 70 billion won ($50 million) on Barclays and a maximum of 20 billion won on Citi.”
Protests from multinational banks against fines for short-selling violations are also strong. BNP Paribas has filed a suit to revoke its fine, arguing that its naked shorting was not intended nor did it generate any significant profit.
In December last year, the FSC fined BNP Paribas SA, its Korean brokerage unit, and HSBC Holdings plc a combined 26.52 billion won for naked short-selling.
Korea’s judiciary body also has different views from its financial authorities. The country’s court recently ruled that only the shares shorted without being first borrowed are subject to fines. If an investment bank enters a market order to short 10 billion won worth of shares without first borrowing them but sells and repurchases only 1 billion won worth, the IB can be fined only for the final 1 billion won in transactions.