Individual Investors Made Collective Response about First Short Selling Disclosure

Individual investors of Celltrion and Jeil Pharmaceutical began a collective action against short selling disclosure that will start for the first time on July 5. They vowed to hold a movement to cancel their accounts of securities firms with many loan transactions. They also said that if the securities firms have sister firms such as banks, they will even boycott products of the sister firms.   

“Not to mention canceling their accounts of securities firms with many loan transactions, we are planning to run on deposit if the securities firms are affiliates of financial holding companies,” said Park Chang-ho, head of the Short Selling System Improvement Group consisting of minority shareholders of Celltrion and Jeil Pharmaceutical on July 4. “We will promote this movement by steadily cooperating with minority shareholders of other companies.” Park claimed that the group has about 3,000 paid members.

At the moment, the Short Selling System Improvement Group, even though they are minority shareholders of Celltrion and Jeil Pharmaceutical, is deliberating alliance with groups of minority shareholders of Sungchang Enterprise Holdings Limited and Hotel Shilla.

The group claimed that although they did not deny short selling itself, stocks vulnerable to short selling will give big damage to small investors. “We agree on the purposes of the short selling system for promoting hedge funds,” Park said. “But in the case of some stocks, small volume of about 10,000 shares can manipulate stock prices. This can always eat small investors.” 

A group of minority shareholders of Celltrion will run ads in major morning newspapers under the slogan of “We Cannot Tolerate Wrong Short Selling Any Longer” in order to denounce those for short selling. In particular, when main bodies of short selling are disclosed through public notices on July 5, they will allegedly initiate the movement to boycott related products. About 2,000 minority shareholders raised over 100 million won for this activity, the Short Selling System Improvement Group said. In addition, they mapped out a plan to inform people of the irrationality of short selling by distributing booklets and lecturing the general public in the future. 

An enforcement ordinance of the Capital Market Act enforced the start of the Short Selling Disclosure System on June 30. When an individual or a legal body short-sell over 0.5% of all stocks of a company, the sale will be subject to public disclosure after three trading days.   The first short selling disclosure will begin on July 5.