Yonhap News Agency, 28 November 2018
South Korea’s financial regulator said Wednesday it decided to fine the Seoul branch of Goldman Sachs Group Inc. 7.5 million won (US$6.66 million) for carrying out naked short selling, which is illegal here.
It marked the largest fine against a financial institution for violating the rules that ban such short selling in South Korea.
Market watchers had expected the Financial Services Commission (FSC) to slap a fine of up to 1 billion won against Goldman Sachs for naked short selling, which was carried out in late May.
A short selling transaction was made by Goldman Sachs in late May, but about 1.3 million shares worth some 6 billion won were not delivered for settlement until two days later, according to financial authorities.
At that time, Goldman Sachs issued a sell order of stocks worth 40.1 billion won without borrowing the stocks, the FSC said in a statement.
Short selling, which is legal in South Korea, refers to the sale of borrowed shares in the hope of making a profit from a price fall by buying the shares back at a lower price.
Naked short selling is the practice of short selling without first borrowing shares.