South Korea’s Supreme Court Confirms HSBC Unit’s Acquittal in Naked-Short Sale Case
South Korea’s Supreme Court upheld a lower-court ruling that cleared HSBC’s Hong Kong unit of illegal naked short-selling charges.
In a case that began with a March 2024 indictment, South Korean prosecutors alleged that three HSBC Hong Kong employees engaged in illegal naked short selling of shares from nine publicly traded companies, totaling roughly 15.8 billion won from August to December 2021. The charges were brought under the Capital Markets Act, which prohibits short sales without securing the underlying shares. The Seoul Southern District Court ruled that the prosecution had not proven the employees acted knowingly and acquitted HSBC’s unit.
An appellate court subsequently upheld that decision, and the Supreme Court has now affirmed the acquittal, leaving the bank free of criminal liability. The ruling marks the first criminal case of its kind in South Korea and underscores the difficulty of proving intent in naked-short-selling investigations.
Why it matters
The decision clarifies how South Korean courts may interpret and enforce naked-short-selling prohibitions.
In this story
