Supreme Court upholds acquittal of HSBC in naked short-selling case

The Supreme Court on Thursday upheld a lower court's acquittal of HSBC's Hong Kong unit on charges related to violating Korea's short-selling rules.

Prosecutors earlier indicted the bank in March 2024 for violating the Capital Markets Act, which bans naked short selling, marking the first criminal case of its kind in the country.

Naked short selling refers to short selling stocks without first securing them or ensuring they can be secured.

Prosecutors alleged three bank employees knowingly engaged in illegal naked short selling of shares of nine publicly traded companies worth about 15.8 billion won ($11.8 million) from August to December 2021.

At trial, the Seoul Southern District Court acquitted the bank, ruling that there was no evidence to prove the employees engaged in naked short selling with the knowledge that they were violating local rules.

An appellate court upheld the acquittal, sending the case to the top court on appeal.

Yonhap