[단독] The Financial Services Commission is investigating allegations of illegal short selling of KB, Meritz, rich countries, and CLSA securities

Input 2021.03.25 17:42 | Revision 2021.03.25 18:33

Abuse of market maker status, illegal short selling caught

It was found that the Financial Services Commission is investigating three domestic securities companies, including KB Securities, Meritz Securities, and Buuk Securities, and CLSA, a Hong Kong-based securities firm, for illegal short selling. These four securities companies are accused of using their status as market makers to make illegal short selling outside the range permitted by law.

Short selling refers to a method of buying and repaying stocks when stocks are expected to fall after they are sold by borrowing and selling stocks, and non-borrowing short selling without borrowing stocks is illegal.

Market makers refer to securities companies that lead price formation by suggesting buy and sell prices and supply liquidity to the market. Even when the Financial Services Commission banned short selling from March last year, market makers were able to sell short in consideration of this particularity.

Suspicion of short selling, which had nothing to do with market-making activities, was raised against individual investors, and when opinions on the questionnaire boiled, the Financial Services Commission ordered a special supervision through the Korea Exchange. Eventually, the Korea Exchange turned over to the Financial Services Commission’s Capital Market Research Group at the end of last year after finding the allegations of illegal short selling by four securities companies. The Korea Exchange judged that the fastest place has been illegal short selling since 2017.

One official said, “Hong Kong-based CLSA, domestic KB Securities, Meritz Securities, Bukuk Securities (001270)“I know that an investigation is underway.”

By the end of this month, the self-help group will determine the level of disciplinary action against these four securities companies and go through a deliberation by the Capital Market Research and Deliberation Committee (self-care). Disciplinary action is finalized by a resolution of the Securities and Futures Commission (Jungseon Committee) and the Financial Services Commission after self-examination.