Jin Young-tae and Choi Mira, 10 October 2018
The U.S. investment banking giant Goldman Sachs could face a fine of up to 2 billion won ($1.76 million) by the South Korean financial authorities for conducting more than 100 naked short selling transactions banned by the Korean law.
This would be the biggest fine to be slapped for a financial institution in short-sale transactions in the country.
According to sources from the investment banking industry on Tuesday, the financial authority decided to impose a 2 billion won fine on Goldman Sachs for illegally shorting more than 100 local stocks on May 30, and will submit its finding to the top decision-making Securities & Futures Commission of the Financial Services Commission (FSC) within this week.
In earlier investigation by the Financial Supervisory Service, the Seoul branch of Goldman Sachs arranged over 350 short-selling orders from Goldman Sachs International, its British branch, and went short on 20 local stocks – three listed on the Kospi and 17 on the Kosdaq. It however did not deliver shares on time and left short sellers “naked” amounted to 1.38 million shares worth 6 billion won on May 30.
The regulator in further probe discovered over 100 cases of naked short-selling attempts by the investment bank. Naked short selling, or making short order without stock inventory, has been banned since 2008.