Regulators globally are starting to focus on short selling

Post by Michael Chen, Head, Partnerships

Regulators globally are focusing on improving shareholding disclosures with the aim to increase transparency and governance for the sake of minority shareholdings and investors globally whereby non-compliance can lead to large fines for the firms, and more importantly, and civil liabilities for responsible officers.

As an example, the Securities and Futures Commission of Korea, part of the Korean Financial Supervisory Service, has imposed fines of KRW 685 million (USD 609,000) on ten foreign securities companies for violating short selling rules in Korea from 2018-2019. Source 

For violating short selling restrictions, FSS fined the firms depending on the number of violations, ranging from KRW72-180m. This seems to be only the start, with FSS now armed with new revised legislation with enhanced penalties.

Notably, FSS now plan to strengthen investigations and conduct monthly inspections compared to a bi-annual inspection prior. The revised legislation took effect 6 April 2020 in that non-compliance with the short selling rules will not have just have financial penalties, but responsible officers will also face up to a year in jail or up to five times profits on a trade.

Artius Global provides solutions for firms to remain compliant and remove the regulatory risk in respect to global regulatory disclosures ranging from shareholder disclosures, takeover panels, short selling and other mandatory requirements.

Adapted from:

AG’s Linkedin post

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