Another hedge fund is now indicted for illegal short selling by South Korean securities regulators, a growing trend in the country.
South Korean regulators have indicted Australian hedge fund Regal Funds Management Pty Ltd and a former employee for alleged violations of short-selling regulations.
The Korean Prosecutor’s Office has formally charged the former Regal employee for purported breaches of securities trading laws dating back to 2019.
Regal confirmed in a statement on Friday that the firm has also been indicted in connection with these allegations.
The charges stem from a comprehensive review of short selling conducted by the Korean Financial Services Commission.
Regal, which managed $17 billion as of the end of September, has denied the accusations and stated that it is “considering its rights under South Korean law.”
The company plans to evaluate any potential financial impact after it receives a copy of the indictment, which it has not yet obtained.
A spokesperson for the Seoul Southern District Prosecutor’s Office declined to provide additional comments.
Bloomberg News reported in August that prosecutors in South Korea had been prompted to investigate the hedge fund for possible violations of capital markets regulations.
In March, South Korea also indicted the Hong Kong unit of HSBC Holdings Plc and three of its traders for similar illegal short-selling activities.
Banks and hedge funds are facing intensified scrutiny in South Korea as authorities increase their efforts to eliminate illegal short-selling practices and impose stricter penalties for stock manipulation and other unfair trading activities.
This week, financial authorities announced the discovery of illegal short trades worth 211.2 billion won involving nine global investment banks.
Additionally, South Korea plans to lift its ban on short selling in March 2025, a restriction that has been in place since November of last year as the government aimed to eliminate naked short selling — the practice of selling shares without first borrowing them, which is illegal.
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Also Read: Illegal Short Sellers Will Now Face Life Sentence In Prison
More on South Korea Markets
- South Korea Now Finds Banks Pursued Illegal Shorting Scheme
- South Korea Now Speaks on Impact of Illegal Short Selling
- Korean Regulators Now Impose Billions In Fines For Illegal Trading
- Citadel High Frequency Trading: Fined by Korea’s Regulators
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