Korea’s Financial Regulator Hits UBS With Hefty Fine

Korea’s financial regulator has fined the Seoul branch of UBS AG (in Zurich) for allegedly violating short-selling rules. Other financial firms are under investigation.

UBS Securities and ESK Asset Management were fined a total of 6 billion won ($4.5 million) by Korea’s financial regulator in what it said was a violation of local short-selling rules.

It marks the first time financial authorities imposed penalties on financial firms for breaching rules since the country’s capital market law was revised in April 2021 to tighten short-selling regulations.

The statement added that financial regulators are currently investigating ten other domestic and foreign financial firms for similar violations.

The report, citing industry sources, said the Securities and Futures Commission (SFC), a top financial regulator decision-making body, decided last Wednesday to fine UBS Securities 2.18 billion won and ESK 3.87 billion won for illegal short-selling practices.

UBS’s Seoul branch allegedly placed sell orders for shares of a local company worth 7.3 billion won in 2021 without owning the shares. Normally, traders must borrow shares before they can sell them short.

An official from the Financial Supervisory Authority said the decision was made after several in-depth discussions on the appropriate level of sanctions.