Hedge Funds Beware: Naked Shorts Can Land You Jail Term in Korea
- Retail-dominated stock market drives stricter penalties
- South Korea has temporarily banned short-selling since March
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Korea is imposing punitive penalties, including at least a year in jail, on investors who illegally sell stocks short. The stricter punishments come as Seoul prepares to lift a pandemic-imposed ban on trading borrowed shares.
Naked short-sellers, or investors who sell stocks they haven’t even borrowed, will be punished by at least a year’s jail term or fined up to five times their profit from the trade, according to a statement from the Financial Services Commission. Currently, naked short selling, which has always been illegal in Korea, is punished by lower fines.