Very Light Fines and Warning
The Financial Supervisory Service announced on March 1 that a total of 127 fines and warnings were issued for illegal short selling from 2010 to April last year and foreign investors accounted for 93.7 percent of the total.
Such a high ratio is because the South Korean stock market is too lenient with foreign illegal short sellers. It is as recently as last month that the financial authorities disclosed their names for the first time.
Besides, the fines and warnings are very light. For example, in October 2021, a foreign investor conducted illegal short selling with 213,666 preferred shares of Samsung Electronics. Its scale was 14.5 billion won or more but the fine was as small as 45 million won, 0.3 percent of the scale.
The leniency is because foreign violators in most cases can go unpunished by mentioning mistake and lack of intentionality. For the past 12 years, the authorities regarded only 11 cases as intentional. Domestic individual investors’ claims for a fairer market have not been accepted by the government.