Goldman Sachs settles naked short selling issue
06 June 2018 Seoul
Image: Shutterstock
Goldman Sachs's alleged naked short selling in South Korea was an “isolated offshore manual booking error”, according to a statement from the global investment bank.
The South Korean Financial Supervisory Service reportedly launched an investigation into the short selling activity, which is an illegal trading practice in the region.
Goldman Sachs said that the short selling was an isolated offshore manual booking error “resulting in settlement issues involving approximately KRW 6 billion ($5.6 million) of Korean stock”.
“We informed the Korean stock exchange and regulator and worked closely with them to resolve the issue.”
One market observer, who did not wish to be identified, said that there was unlikely to be any foul play on Goldman Sachs’s part.
The observer said: “Goldman Sachs is a reputable organisation which was one of the first to use the securities borrowing and lending (SBL) mechanism when the regulations changed in 2003.”
“It is unlikely that there is any foul play here and that Goldman Sachs may have had a timing issue that may have created a technical short sale. My hope is that the Korean regulators will not make an example of Goldman Sachs here which could further deter use of the SBL mechanism by other intermediaries which is needed for efficient capital markets.”
The South Korean Financial Supervisory Service reportedly launched an investigation into the short selling activity, which is an illegal trading practice in the region.
Goldman Sachs said that the short selling was an isolated offshore manual booking error “resulting in settlement issues involving approximately KRW 6 billion ($5.6 million) of Korean stock”.
“We informed the Korean stock exchange and regulator and worked closely with them to resolve the issue.”
One market observer, who did not wish to be identified, said that there was unlikely to be any foul play on Goldman Sachs’s part.
The observer said: “Goldman Sachs is a reputable organisation which was one of the first to use the securities borrowing and lending (SBL) mechanism when the regulations changed in 2003.”
“It is unlikely that there is any foul play here and that Goldman Sachs may have had a timing issue that may have created a technical short sale. My hope is that the Korean regulators will not make an example of Goldman Sachs here which could further deter use of the SBL mechanism by other intermediaries which is needed for efficient capital markets.”
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