A South Korean court acquitted HSBC on Tuesday of violating the country's short-selling rules, as reported by a court official in Seoul on February 11th. The Hong Kong unit of the bank was accused of illegal short-selling totaling nearly 16 billion won ($11.01 million) by prosecutors, according to the Yonhap news agency.
The Seoul Southern District Court determined that there was no evidence of HSBC employees knowingly breaking the rules through short selling. Three traders, in addition to the Hong Kong unit of HSBC, were also indicted for engaging in naked short-selling of stocks, the report disclosed.
An HSBC spokesperson stated, "There was no intention to breach any Korean short selling regulations, and we are looking forward to putting this matter behind us."
In South Korea, naked short-selling of stocks, which involves selling stocks without borrowing them or ensuring they can be borrowed, has been prohibited under the Capital Markets Act. Following instances of illegal naked short selling by foreign investment banks, short-selling was temporarily banned in November 2023 due to concerns raised by South Korean retail investors over price drops.
South Korea aims to lift the market-wide ban on stock short-selling in March, with plans to implement a system capable of identifying illicit trades.