Korea imposes fine on 18 companies for violating short selling regulations

South Korea’s financial authority has caught more than a dozen companies that outlawed short-selling regulations as it is determined to enhance supervision on the illegal practice by individuals that seek to profit from the recent stock market turmoil.

According to financial authorities on Sunday, the Securities and Futures Commission of the Financial Services Commission imposed fines and penalties on 18 companies and individuals for violating short selling regulations at its recent regular meeting.

The commission is determined to take swift action against illegal short-selling activities, with the Financial Supervisory Service (FSS) planning to strengthen its inspections to check for cases of short-selling abuse at a time of increased stock market volatility.

In particular, the authority is focusing on checking whether illegal naked short-selling occurred amid the recent sharp fluctuations in the stock prices of battery-related companies.

The FSS said that it conducted a special inspection on three major contract for difference (CFD) handling companies, including Kiwoom Securities Co., and identified various problems across their overall operations.

It was revealed that consumer protection measures were inadequate in areas such as advertising, account opening, sales, and risk management.

Additionally, it was discovered that a related party of a securities company executive used undisclosed information to sell 15 billion won ($11.75 million) worth of stocks just before the stock price crash.