Article: Goldman Sachs affiliate again faces fine for naked short selling

Article - Media, Publications

Goldman Sachs affiliate again faces fine for naked short selling

Bae Hyunjung, 09 April 2019

South Korea’s financial authority has fined a Goldman Sachs affiliate 72 million won ($63,000) for naked short selling, marking the third case of the US-based investment bank facing sanctions here.

The Securities and Futures Commission of the Financial Services Commission judged earlier this year that Singapore-based Goldman Sachs India Investments conducted short selling without securing underlying assets, officials said Monday.

Naked short selling refers to the sale of borrowed shares in order to profit by buying them back at a lower price, but without actually borrowing the stocks first. Unlike short selling, naked short selling has been prohibited in Korea since 2008.

The fined company is said to have cited “human error” as the reason for its disputed tactic, which was not taken into account in the sanctioning decision, according to officials.

The latest move reflected the regulator’s announcement late last year that it will henceforth assume “zero tolerance” against illicit short selling.

This was the third time that Goldman Sachs affiliates faced financial sanctions in Seoul.

The FSC’s investigative body handed down a fine of 7.5 billion won on Goldman Sachs International in November last year for a case of naked short selling. Another affiliate of the investment banking group had been caught for similar violations in 2015, but was issued only a warning.

Read Full Article