South Korean regulators "brandish swords" against four giants, reports suggest JPMorgan Chase and other investment banks received hefty fines.

According to sources, the Financial Services Commission (FSC) and the Securities and Futures Commission of South Korea held a meeting on February 12, 2025, and decided to fine four global investment banks, including JPMorgan (JPM.US), Morgan Stanley (MS.US), UBS Group AG (UBS.US), and Nomura Holdings, Inc. Sponsored ADR (NMR.US), for allegedly violating South Korean stock short-selling regulations. The penalties stem from an investigation launched by South Korea in 2023 into the short-selling activities of global investment banks. It was reported that regulatory authorities found 14 banks engaged in misconduct. Officials plan to finalize the relevant penalty measures before the lifting of the short-selling ban next month. The ban on short selling was implemented in November 2023 to curb illegal "naked short selling," which involves selling stocks without first owning them. Although South Korea is preparing to reintroduce short-selling trading mechanisms, the decision to impose fines highlights South Korea's determination to crack down on short-selling violations. Short selling is not favored by retail investors as it can cause excessive market volatility. Representatives from Morgan Stanley, JPMorgan, and UBS Group AG declined to comment, and a spokesperson for Nomura Securities also stated they could not comment. Prior to this, other international banks, such as Barclays PLC Sponsored ADR and Citigroup, were fined for similar violations in December. Barclays was fined 1.37 billion Korean won (approximately $950,000) and Citigroup was fined 470 million Korean won. In 2023, BNP Paribas and HSBC Holdings were fined a total of 26.5 billion Korean won for suspected violations of the regulation, although on February 11, a South Korean court ruled that HSBC was not guilty of illegal short selling. In addition, two subsidiaries of Credit Suisse paid a total of 27.1 billion Korean won in fines last year. In conclusion, South Korean authorities continue to maintain a high-pressure stance on combating violations of short-selling regulations to ensure fair and stable markets. As the short-selling ban is set to be lifted soon, all market participants are closely monitoring developments.