South Korea’s financial regulator, the Financial Supervisory Service (FSS), is set to impose fines on several global banks, including JPMorgan Chase (JPM), Morgan Stanley (MS), UBS Group (UBS), and Nomura Holdings (NMR). The banks have accused of violating short-selling regulations in the domestic stock market.
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The move comes after a probe launched in 2023 due to concerns over improper short-selling activities. While the specific penalty amount has not been disclosed, this regulatory action reflects South Korea’s efforts to ensure fair trading practices.
FSS Cracks Down on Illegal Short Selling
The FSS cited violations of rules prohibiting “naked short selling,” where investors sell shares without first borrowing them or confirming their availability.
It is worth highlighting that South Korea had imposed a temporary ban on short selling in November 2023, to address concerns about market volatility. However, the ban is expected to be lifted in March 2025, with new regulations and a robust surveillance system to prevent illegal short-selling activities.
Move Follows Similar Fines in the Past
The Korean regulator’s move follows similar fines imposed on other banks in the past. In December 2024, Barclays (BCS) and Citigroup (C) were charged 13.7 billion won and 4.7 billion won, respectively, for similar allegations.
Further, BNP Paribas (BNPQY) and HSBC Holdings (HSBC) were fined a combined 26.5 billion won in 2023 for allegedly breaching short selling rules. However, a Korean court later found HSBC not guilty of the charge.
Which Bank Stock Is Best to Buy Now?
Turning to Wall Street, analysts think that JPM, UBS, C, and MS stocks have the most room to run. In fact, UBS stock’s price target of $38.41 implies the most upside potential of 16.3%. Meanwhile, analysts see downside potential in HSBC stock.
