Credit Suisse could face $36.32 million fine in South Korea over short-selling allegations

Short-selling breach: Credit Suisse faces the potential of being fined 50 billion won ($36.32 million) in South Korea for allegedly breaching short-selling rules. 

The notifications regarding possible penalties have been sent to both the South Korean and Singaporean branches of the bank, according to reports from the Chosun Ilbo newspaper.

The Financial Supervisory Service (FSS) is anticipated to disclose its mid-term findings on Friday concerning the investigation into short-selling activities conducted by global investment banks.

Regulatory review awaited

Reports suggest that around 10 international banks may collectively incur fines exceeding 100 billion won. However, the definitive penalties will be determined subsequent to a review by committees at the FSS and the Financial Services Commission.

While the FSS has chosen not to comment on the Chosun Ilbo report, UBS in Asia Pacific has also opted not to provide any statement. UBS took over Credit Suisse in 2023.

Last week, the financial market watchdog announced the commencement of testing for a new monitoring system intended to identify illegal short-selling of domestic stocks prior to the complete removal of the short-selling ban in South Korea. 

The Capital Markets Act in South Korea prohibits 'naked' short-selling of stocks, wherein investors sell shares without first borrowing them or confirming their availability for borrowing.

(With Reuters Inputs)