 |
| The Financial Supervisory Service headquarters in Seoul / Yonhap |
By Jhoo Dong-chan
Financial authorities will tighten monitoring on foreigners' unfair trading practices this year, an official said Tuesday.
Unveiling its regulatory directions for 2019, the Financial Supervisory Service (FSS) said it will crack down on activities that violate market principles.
The move comes after a dramatic growth in the number of unfair trades by foreign investors.
"The agency exposed 27 unfair trading practices last year, up 17 from the previous year's 10 cases," an FSS official said. "Of them, some foreign investors were found to have engaged in high-frequency trading by utilizing computer algorithms to gain excessive profits in the short term."
High-frequency trading refers to an automated trading platform used often by large investment banks, institutional investors and hedge funds to utilize computerized algorithms to transact a large number of orders at extremely high speeds.
In August, the Korea Exchange (KRX) investigated the Bank of America Merrill Lynch Seoul office for allegedly disturbing the stock market through its high-frequency trading practices.
The issue came after a group of individual local investors filed petitions to the presidential office, saying they suffered huge losses due to large, high-frequency trades and short selling against Korean stocks through the brokerage since last year, the London-based Financial Times reported.
Separate from its move to crack down on such high-frequency trading, the FSS said it will also look more closely into possible false disclosure practices this year.
The measure follows the year's outlandish fairy tale-like disclosure about a sunken Russian "treasure ship," which a Korean firm claimed to have found in the East Sea.
Shinil Group said in mid-July it had found a shipwreck, which it believed to be the 6,200-ton Dmitrii Donskoi that went down near Ulleung Island during the 1904-1905 Russo-Japanese War.
It claimed the shipwreck held 200 tons of gold worth 150 trillion won ($134 billion), but the claim was later revealed as a web of fraudulent and deceitful practices to rake in money through false information and stock price manipulation.
Shinil Group was also accused of making unfair gains by manipulating the share price of Jeil Steel, a tech-heavy Kosdaq-listed firm. The share price of Jeil Steel, which Shinil Group allegedly agreed to acquire shares of, also skyrocketed on the day immediately after the announcement, but then plunged for three consecutive days due to mounting suspicions about the authenticity of the find.
"In order to protect investors, the FSS will look more closely into authenticity of such disclosures," the official said.
The FSS added it will also strengthen its crackdown on "naked short selling" this year.
Short selling refers to the sale of borrowed shares in the hopes of making a profit from the price fall by buying the shares back at a lower price. And naked shorting refers to the practice of conducting short selling without actually borrowing the stocks first, which is prohibited in Korea.
Last year from May 30 to 31, global financial giant Goldman Sachs International and its Seoul branch were fined 7.5 billion won ($6.6 million) for short selling stocks without borrowing them first.
It was the biggest penalty imposed on a financial company over such a trading irregularity.
![[ANALYSIS] Tesla, BYD's price cuts unnerve LGES, Samsung, SK](https://img.koreatimes.co.kr/upload/thumbnailV2/b1cf8ba68d474cb69352bfe7ea9d14f0.jpg/dims/resize/178/optimize)
![[INTERVIEW] How ATEEZ achieved worldwide success](https://img.koreatimes.co.kr/upload/thumbnailV2/c7723b56dde94eb4b260950d368fe8fb.jpg/dims/resize/178/optimize)
