Financial Supervisory Service
[The Financial Supervisory Service today announced the results of a survey on the short selling of Daeyang Heavy Industries & Construction. It is said that Daeyang Securities has been short selling shares of Daeyang Heavy Industries, which amounted to 26.57 million shares, until last week after receiving orders from foreign customers since around May.]
[However, according to the due diligence of the Financial Supervisory Service, it was found that about 3.75 million of them were not real stocks. This is the so-called leverage-free short selling. This is strictly prohibited by the Korean Capital Market Act.]
The next afternoon, news about the Daeyang Securities Incident spread.
The previous day, the Daeyang Group made every effort to borrow stocks from here and there, and fortunately was able to borrow a considerable amount from a foreign investment institution on condition of paying a very high interest rate.
I only borrowed about 2 million shares from the National Pension Service, which I believed in. In the end, 3.75 million shares could not be filled, and the Financial Supervisory Service, which conducted the due diligence, had no way to do anything about the part that could not be resolved even after giving time.
Fortunately, Daeyang Group was able to reduce the amount of short selling without borrowings by nearly 85%.
[Stocks worth 600 billion won at the current price did not exist and were circulated in the stock market. However, the Financial Supervisory Service is of the view that there is no basis for punishment other than the imposition of a fine for such an act. According to the Financial Supervisory Service, the only punishment for non-borrowed short selling is a fine of up to 90 million won.]
However, the news coverage was not very favorable.
[Therefore, citizens are questioning how effective such a flimsy punishment will be for the act of disturbing the stock market. It is argued that it is not fair compared to other countries. Reporter Lee Tae-hyung, what about other countries?]
[yes. In the United States, non-borrowed short selling can be punishable by up to 20 years in prison. And in France, administrative sanctions, including suspension of business, and fines of up to 100 million euros, and in the UK there is no upper limit on fines. Compared to this, the argument that South Korea’s punishment is too weak is true.]
At the resolute reporter’s words, the anchor receives the words again.
[Then it is understandable that public opinion criticizing the financial authorities and the legislature is high. Moreover, the fact that most of the subjects who commit non-borrowing short selling are foreigners seems to be a bigger problem. Citizens also want to impose harsher penalties for these acts, even in other laws, if they cannot be punished by the Capital Markets Act. Are there any other laws that might apply?]
[yes. If it is a law other than the Capital Market Act, you may consider applying the offense of excess issuance stipulated in the Commercial Act. The offense of over-issuance is that if shares are issued in excess of the total number of shares to be issued, imprisonment for not more than 5 years or a fine of not more than 15 million won can be imposed. However, in this case, the entity is limited to the promoters, directors, executive officers or agents of the company. In this case, neither Daeyang Securities nor foreigners who placed a short sale order are applicable.]
[Then, does this mean that even after committing such a horrendous thing, it will end with a fine of 90 million won?]
[yes. Yes for foreigners. However, in the case of Daeyang Securities, there is an analysis that even revocation of the license is possible.]
The news had spent quite a bit of time analyzing the situation in-depth.
[Daeyang Securities claims that there is no way to determine whether it is a non-borrowed short sale or a borrowed short sale because foreigners have disposed of stocks stored in a separate custody account. Is it true?]
[It’s not like that. A brokerage company has a way to confirm whether a short sale has been made by borrowing a stock before it is sold. If you haven’t really checked, you may be under suspicion that you haven’t met your verification obligations, or that you may have conspired in the first place. Either way, it can be clearly said that Daeyang Securities is at fault.]
[okay. On the other hand, some voices doubt the identity of the foreigner who ordered this large short sale. It is argued that it is necessary to check whether the person who ordered such a huge short sale is a real foreigner or a person related to Daeyang Heavy Industries. In response, both Daeyang Heavy Industries and Daeyang Securities responded that it was completely unfounded.]
The content of the report has reached a point-of-view.
[Actually, there is no way to confirm the identity of the foreign investor. There is no proper legislation yet. It is not for nothing that the word ‘black-haired alien’ comes out.]
[Meanwhile, the Financial Supervisory Service today is a serious offense by spreading false rumors about certain stocks under the Capital Market Act or spreading false schemes against the act of instigating the rise of the stock price of Daeyang Heavy Industries to show the role of the short seller today. warning that it may be Such market manipulation may result in criminal punishment, so caution is needed.]
People who watched the news were outraged that they would end up with a fine for doing such a thing. And he was even more outraged at the warning about sedition delivered at the end of the news.
– Does that make sense? Counterfeit securities is a fine, and if you ask to eradicate the short selling force, you will be sentenced to prison. What country’s law is that?
– That’s funny. So you’re just saying that the ants should follow the movements of foreigners and institutions and then just die?
– It’s dirty, Mr. X! I don’t sell even if I die. not agitation. Just don’t farm!
– I don’t sell either. dirty really
The last warning from the Financial Supervisory Service provoked investors even more.
– The Daeyang Group and the Financial Supervisory Service are on the same team, right?
– Surely. Can’t you do that unless you’ve received something?
– I don’t sell it. Even if I eat and die, I won’t sell it. not agitation.
– Daeyang Heavy Industries Co., Ltd. is certified. I will never sell it! not agitation.
Even so, it was like pouring oil into the boiling public mind.
And for that reason, the market responded immediately.
As soon as the market opened the next day, the stock price began to soar.
It was thanks to the gathering of anger from ordinary investors who felt they had been subjected to power and foreigners.
– Not agitation. I bought all of Daeyang Heavy Industries today.
– Not agitation. Either Daeyang Securities went bankrupt or I went bankrupt.
– Not agitation. Even if you die until 40,000, you won’t sell it.
– Not agitation. I have 50 million.
For some reason, the saying that it was not a sedition became a meme and spread.
Even so, it was strange that the stock price did not rise as the number of new investors in the market was dry and the selling price was dry.
Before the morning of that day, the share price of Daeyang Heavy Industries had already reached its upper limit.
And, without wasting time, the opposition party issued a demand to fire the head of the Financial Supervisory Service.
* * *
That afternoon, there was an uproar in the office of the chief economic secretary of the Blue House.
“Why the hell did that gentleman say that?”
“It turns out that I received some remarks from the Daeyang Group.”
“I am. Aren’t you crazy? What time is now? Were you upset about that yangban? If not, what did you do during these difficult times? Do you know how angry the VIP was right now?”
“Even if not, there seems to be a lot of talk inside the FSS. It’s okay to just go quietly, the arrows went to the Financial Supervisory Service for nothing.”
“It probably won’t work. Find a successor.”
“All right.”
“This time, look for someone who is clean, not someone who has connections to large corporations like the yangban.”
“Yes.”
At the same time, the main party leaders gathered in the opposition party to discuss how to use this situation.
“The Governor of the Financial Supervisory Service kicked the ball of shit properly.”
“So. This opportunity should not be missed.”
“I have an interview with Jaemin Ilbo tomorrow.”
“no. Rep. Kim is quick on his feet. If it’s Jaemin, you mean Dasan will take a step this time too, right?”
“It looks like that. I will come and say the right thing.”
“now. Everyone, don’t play too individually. First of all, you have to have a good strategy.”
There is an opinion that we should pay attention to the slightly overheated atmosphere.
It was an opportunity that could never be wasted as an opposition party.
“What kind of strategy do you have? You have to chew the Daeyang group very well. And the head of the Financial Supervisory Service, isn’t the next president the next?”
“Anyone else have an interview appointment? Don’t do it on your own, let’s get the words right first.”
“I have an interview with the Seogang Ilbo.”
“Five! If it’s Seogang, it means that Cheil Group is also interested.”
“It is the best in fertility. No matter how big the ocean, it will be difficult this time.”
“Yes. Even if it doesn’t, the old man’s energy seems to be declining, but Jeil and Dasan seem to want to miss this opportunity.”
“Rather than that, wouldn’t Dasan and Jeil have planned this incident?”
Opposition lawmakers are paying attention to the allegations raised by someone.
“Are you planning? Why?”
“It seems that Dasan and Kang Yujin have a pretty close relationship. Perhaps Dasan may have ordered Kang Yujin.”
“I don’t know if it’s the other way around, but what about that?”
“Even if Kang Yu-jin is doing well now, does it make sense to instigate traditional fertility?”
“now. Don’t go to our mountain, let’s do it right. So, you mean that Kang Yu-jin and Da-san are related, and Jeil also intervened there, right? Is there anyone in contact with Kang Yujin?”
But no one spoke.
“Did you not see it?”
“Ha, indeed. How can there be none? Isn’t that Kang Yu-jin from Korea?”
“Actually, you almost look like an American.”
“Isn’t it okay to say that you don’t know me after doing things like that in Korea?”
“I will try to contact you. It seems like there is a connection on my side.”
After a lot of thought, a lawmaker went out with a gun.
“Five! Congressman Kang. Yes, you are the same Mr. Kang, so there must be something in common.”
“I found out it was about 12 inches tall. Well, what would that mean? Anyway, let’s push through that.”
“haha. Yes, as long as there are a number of things to do with it, you can float the horse.”
Due to the Daeyang Heavy Industries incident, good and bad were divided here and there. Of course, the people who enjoyed the most were those who held shares in Daeyang Heavy Industries.
“SS Partners secured 12.67 million shares and 43.06 million shares to other investment institutions. It accounts for just over 53% of Daeyang Heavy Industries’ total stock issuance. The closing price today is 218,100 won.”
After the market that day, Joanna reported the situation.
While SS Partners made a public purchase in Korea on the day when the loss of 5 trillion won was announced, Joanna also bought 10 million shares through other overseas investment institutions. The drop was so great that there was no reason not to pick it up.
Now, Eugene has enough stock to completely take away Daeyang Heavy Industries. But it wasn’t just that Eugene was raking in such a large amount.
There is a much more important reason than that. Among Daeyang Heavy Industries’ shares, if Eugene owns 53% and Daeyang Group holds 30.9%, less than 20% of the shares are released on the market.
Excluding about 6% of the holdings of the National Pension Service, only about 10% of the amount is actually released.
The Daeyang Group cannot sell its shares in haste to defend its management rights, and the same is true for the National Pension Service.
Now, it is Eugene himself who actually determines the share price of Daeyang Heavy Industries.
It should be taken into account that the stocks that Daeyang Heavy Industries made and sold in the market through a non-borrowed short sale are in circulation, but considering that the amount of short sale that Daeyang Group has to deal with, the key is still Eugene.
“Calculated at the current share price, the total is over 10 trillion won.”
Joanna smiled and finished the report. Of course, 10 trillion won is not an amount that can be turned into real money. It has risen to 200,000 won due to lack of sales right now, but once it started to collapse, it was obvious that it would fall terribly.
“It was a lot of work. You know what’s more important in the future?”
“Sure. We are ready.”
Things were going in the direction Eugene wanted. No, the FSS Governor’s remarks are actually becoming more exciting than expected.
A word from the head of the Financial Supervisory Service was much more effective than short selling without borrowing to elicit people’s anger.
“But in Korea, do you really have to go to jail if you say something like that?”
Joanna asked as if she didn’t understand.
“Of course not. If you tell me to punish the short sellers, I’ll send you to jail… … .”
Eugene, who was talking, suddenly disappeared. For some reason, I really thought that I might be able to stay like that.
“Well, it’s different from America. Sometimes you go to jail for saying the right thing.”
“okay. Then when I go to Korea, I have to be careful about what I say. Because I don’t know what the problem is.”
“Wherever you are, you better be careful with your words.”
Right now, on that day too, I saw a person making fun of his mouth and paying a very good price.
The sacking of the head of the Financial Supervisory Service seems to have been confirmed now. Although no announcement was made, the Blue House and the ruling party were already worried that the voices of criticism would spread to that area.
Eugene is unaware of it, but if it were not for this incident, the person who would have entered the National Assembly through the head of the Financial Supervisory Service and would eventually occupy a place in politics was falling apart like that.