What did the Supreme Court rule in the HSBC Korea naked short-selling case?

The Supreme Court upheld the acquittal of HSBC’s Hong Kong unit, leaving in place lower-court rulings that the alleged offenses by three employees had not been proven.

How much alleged naked short selling did HSBC conduct in Korea, and when did it occur?

Prosecutors alleged that three HSBC employees conducted naked short sales involving shares of nine publicly traded companies worth about 15.8 billion won from August through December 2021.

Top court upholds HSBC's acquittal in short-selling case

Q: Why did Korean courts acquit HSBC in the naked short-selling case?

The Seoul Southern District Court found that the employees’ alleged offenses were not proven, noting that the orders were placed automatically through the bank’s system and that employees borrowed shares after trades to cover shortfalls. The appellate court later upheld the acquittal.

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Summary

The Supreme Court on Thursday upheld HSBC’s Hong Kong unit’s acquittal in a case involving alleged violations of Korea’s short-selling rules. Prosecutors indicted the bank in March 2024 after alleging that three employees conducted illegal naked short sales worth about 15.8 billion won from August to December 2021. The lower courts found the employees’ knowledge of the alleged offenses was not proven, and the top court finalized the acquittal.

Key Facts

The case was prosecuted under the Capital Markets Act, which bans naked short selling in Korea.
The alleged trades involved shares of nine publicly traded companies and were valued at about 15.8 billion won ($11.8 million).
The Seoul Southern District Court said the orders were placed automatically through HSBC’s system and that employees borrowed shares only after trades to cover shortfalls.
The appellate court upheld the first-instance acquittal before the Supreme Court issued its ruling.
The prosecution described the case as the country’s first criminal case involving alleged illegal naked short selling.

By Yonhap

Published Oct 8, 2026 2:21 pm KST
Updated Oct 8, 2026 4:30 pm KST

A logo for HSBC / Reuters-Yonhap

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.

In the first-instance trial, the Seoul Southern District Court acquitted the bank, ruling the employees' alleged offenses were not proven.

The court said the employees were likely unaware of the details of the trade since the short-sale orders were placed automatically through the bank's system and they only borrowed shares after trades to cover shortfalls.

An appellate court upheld the acquittal before it was finalized by the top court.

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