Why was HSBC acquitted in South Korea’s naked short-selling case?

The Seoul Southern District Court found insufficient evidence that HSBC employees knew they were engaging in naked short selling in violation of Korean rules. The appellate court upheld that decision, which the Supreme Court later finalized.

When did HSBC’s alleged illegal naked short selling take place, and how much was involved?

The alleged transactions occurred from August through December 2021 and involved shares of nine publicly traded companies valued at about 15.8 billion won, or $11.8 million.

What makes the HSBC case significant under South Korea’s short-selling rules?

Prosecutors indicted HSBC in March 2024 under the Capital Markets Act, making the case the first criminal prosecution in South Korea related to alleged naked short selling. Naked short selling is prohibited because the seller has not secured the shares or ensured they can be secured.

Top court upholds HSBC's acquittal in short-selling case

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Summary

The Supreme Court on Thursday upheld HSBC’s Hong Kong unit’s acquittal in Seoul in a case involving alleged illegal naked short selling. Prosecutors indicted the bank in March 2024, making it the country’s first criminal case of its kind. Three employees were accused of naked short selling shares in nine companies worth about 15.8 billion won from August to December 2021.

Key Facts

The Capital Markets Act bans naked short selling, which involves selling stocks without first securing them or ensuring they can be secured.
The Seoul Southern District Court acquitted HSBC after finding no evidence that its employees knew they were violating local rules.
An appellate court upheld the acquittal before the Supreme Court finalized it.
Prosecutors alleged that the transactions involved shares of nine publicly traded companies and totaled about 15.8 billion won, or $11.8 million.

By Yonhap

Published Oct 8, 2026 2:21 pm KST

A logo for HSBC / Reuters-Yonhap

The Supreme Court on Thursday upheld a lower court's acquittal of HSBC's Hong Kong unit on charges related to violating Korea's short-selling rules.

Prosecutors earlier indicted the bank in March 2024 for violating the Capital Markets Act, which bans naked short selling, marking the first criminal case of its kind in the country.

Naked short selling refers to short selling stocks without first securing them or ensuring they can be secured.

Prosecutors alleged three bank employees knowingly engaged in illegal naked short selling of shares of nine publicly traded companies worth about 15.8 billion won ($11.8 million) from August to December 2021.

In the first-instance trial, the Seoul Southern District Court acquitted the bank, ruling there was no evidence to prove the employees engaged in naked short selling with the knowledge that they were violating local rules.

An appellate court upheld the acquittal before it was finalized by the top court.

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