JPMorgan, UBS, Nomura Face Korea Short-Selling Fines, Maeil Says

South Korea's financial authorities have imposed fines on global investment banks JPMorgan, UBS, and Nomura for violating regulations on short selling, according to a report by Maeil Business Newspaper. The fines are part of an ongoing investigation into illegal short selling activities by major global investment banks (IBs) from 2023.

The Financial Services Commission (FSC) held a Securities and Futures Commission meeting on February 12, 2025, and decided to impose fines on these banks for their involvement in short selling violations. The fines are part of a broader effort by the authorities to crack down on illegal short selling activities and maintain market fairness.

The fines imposed on JPMorgan, UBS, and Nomura follow previous penalties levied on other global IBs for similar violations. In 2023, BNP Paribas and HSBC were fined a combined 26.5 billion won for violations of short-selling regulations. In July 2024, two affiliates of Credit Suisse Group were fined a total of 27.1 billion won for their involvement in illegal short selling activities.

Financial authorities have stated that their basic policy is to complete the total investigation before the resumption of short selling at the end of March. However, there is room for continued court disputes in the future, as the courts have ruled that financial authorities' sanctions for violations of short-selling regulations may be unfair. In August 2024, the Seoul Administrative Court ruled in favor of the plaintiff in a lawsuit filed by the foreign financial company Kepler-Shubreu to cancel the imposition of a short selling penalty. On February 11, 2025, HSBC was found not guilty of illegal short selling by the Seoul Southern District Court.

The ongoing investigation and fines imposed on global investment banks highlight the importance of compliance with local regulations and the consequences of violating short selling rules. As the financial authorities continue their efforts to maintain market fairness and upgrade the market system, global IBs must adapt their strategies to comply with local regulations and avoid potential penalties.

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