(Bloomberg) — South Korean regulators have charged one of Australia’s largest hedge funds with short selling, a sign that the South Korean government is widening its crackdown on short selling across the financial industry.
Most Read Articles on Bloomberg
Regal Funds Management announced in 2019 that it was indicted along with a former employee for allegedly violating securities regulations. The indictment follows a market-wide investigation into short selling by the Korean Financial Services Commission, it said in a statement. on friday. A spokesperson for the Seoul Southern District Prosecutors’ Office declined to comment.
Regal, which managed A$17 billion ($11.4 billion) at the end of September, denied the allegations and said it was “considering its rights under South Korean law.” After reviewing a copy of the indictment, which it has not yet received, it will assess the significance of the “potential temporary financial impact on the group.”
In an April 16 filing, Regal announced that it would appeal a 313 million won ($228,408) fine it was fined at the time for alleged securities law violations related to transactions by a former employee.
The regulator’s crackdown marks an intensification of South Korea’s efforts to eliminate illegal short-selling and other unfair practices that have previously angered the world body. Although fines are small, they tend to send a strong message about the government’s intentions.
Short selling in South Korea’s $1.9 trillion stock market was banned a year ago, increasing scrutiny of the financial industry. Banks such as Credit Suisse Singapore and HSBC Holdings Plc, as well as hedge funds such as Seganti Capital Management and Jane Street Group LLC, are also facing investigations and fines as part of the crackdown.
In May, authorities announced that they had uncovered 211.2 billion won ($155 million) worth of illegal short-selling transactions by nine global investment banks.
Bloomberg News reported in August that South Korean prosecutors were asked to investigate a hedge fund for allegedly violating capital market rules. But the accusations reverse what appeared to be a thaw in the jurisdiction’s aggressive stance toward active fund managers, just months before the jurisdiction is scheduled to lift its ban on short selling in 2025. It seems.
story continues
–With assistance from Shinhye Kang and Youkyung Lee.
(Updated heading, added expected fine amounts to graph 4, added details to graphs 5 and 6)
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP
