By Kim Da-ye
Deutsche Bank Group’s Korean securities unit is expected to face a record fine from the Seoul bourse if a massive selloff of shares on Nov. 11 is found fraudulent, the Seoul Economic Daily, a sister publication of The Korea Times, reported Thursday.
The brokerage was responsible for selling off stocks worth 1.6 trillion won in the final 10 minutes of trading hours that day, the expiration date for option contracts. The KOSPI plunged 53.12 points, benefiting those who bought derivatives designed to generate profit when stock prices fall.
The Korea Exchange (KRX) can punish member firms through three options _ delisting, imposing a fine or giving a warning. The exchange imposed a record fine of 250 million won on Kiwoom Securities in June 2009.
If found at fault, the brokerage will be fined for the late reporting of orders to the bourse. In order to make orders between 2:50 p.m. and 3 p.m., a dealer must let the exchange know in advance by 2:45 p.m. It did so one minute late at 2:46 p.m.
The Seoul Economic Daily said the securities firm could have been slapped with a lighter punishment, but in order to prevent further incidents, the KRX is considering harsher measure.
An exchange official said that if the Financial Supervisory Services (FSS) finishes its investigation and finds the trading to be fraudulent, the bourse would review the penalty.
The FSS said on Jan. 21 that it was still investigating Deutsche Bank after media reported that it had completed an investigation into the bank’s brokerage unit in Hong Kong and planned to refer the case to the prosecution.