South Korea uncovers illegal short selling by seven additional banks.

South Korea's Financial Supervisory Service (FSS) announced on Monday that it identified rule violations involving short-selling by seven additional banks. This comes as part of a broader examination of foreign investment banks' trading activities in the country's stock market. This follows the enforcement of a short-selling ban last November after illegal activities were detected involving two foreign firms in October, prompting a focused investigation into other banks.

The FSS's recent findings are part of an ongoing probe into 14 foreign banks, revealing unauthorized transactions now implicating nine banks with combined irregularities worth 211.2 billion won ($154.76 million). The investigation is still ongoing for five other banks, details of which remain undisclosed by the FSS.

In related news, South Korea's Chosun Ilbo daily reported that Credit Suisse AG had been informed of a potential 50 billion won fine for non-compliance with short-selling regulations. This notice involves the bank's South Korean and Singaporean branches, although both FSS and UBS, which acquired Credit Suisse in 2023, have not commented on the matter.

Amidst these developments, the FSS is collaborating with Hong Kong authorities and will be discussing South Korea's short-selling laws there later this month. In response to these breaches, South Korea has extended its ban on "naked" short selling – selling shares without securing them beforehand – and is developing new monitoring systems to better identify and prevent such violations in the future.