Seoul:The Supreme Court has upheld a lower court's decision to acquit HSBC's Hong Kong unit of charges related to violations of South Korea's short-selling regulations.
According to Yonhap News Agency, prosecutors had indicted the bank in March 2024, accusing it of breaching the Capital Markets Act, which prohibits naked short selling. This case was notable for being the first criminal charge of its nature in South Korea.
Naked short selling involves the sale of stocks without first securing them or ensuring their availability. Prosecutors claimed that three bank employees were involved in illicit naked short selling of shares from nine publicly traded companies, totaling approximately 15.8 billion won (US$11.8 million), between August and December 2021.
The Seoul Southern District Court, in the first-instance trial, acquitted HSBC, stating that the alleged offenses by the employees were not substantiated. The court pointed out that the employees might not have been aware of the trading details, as the orders for short sales were executed automatically through the bank's system, and shares were borrowed only after trades to offset shortfalls.
An appellate court later upheld this acquittal, and the Supreme Court has now finalized the decision.