The controversy over short selling is spreading again with the KRW 112 trillion dividend incident on Samsung Securities. Although individual investors are urged to abolish short selling in the market, the government is still cautious about the short selling system. Financial institutions will re-examine the entire investment system including the short sale system, pointing out that the unreasonable short sale system has raised the stake of Samsung Securities ghost stocks.

More than 1,000 petitions were filed on the Cheong Wa Dae petition bill asking for the abolition of the short sale on April 9, and more than 180,000 people agreed on the "Samsung Securities system regulation and short selling ban" appeal four days ago. Considering the increase in the petition for Cheong Wa Dae, the government`s response standard of 200,000 is likely to surpass it soon.

Earlier this year, Samsung Securities paid 2,010 million shares of stock for the company`s stockholders by paying dividends to its employees. In addition, 16 Samsung Securities employees sold stocks that were wrongly placed on the market, causing a 12% plunge in share prices.

Samsung Securities has explained that it is an employee`s mistake, but when a brokerage firm chooses to do so, it becomes a reality that the company can issue and sell virtual stocks without issuing real stocks.

As ghost stock trading has become reality, investors are asking for the abolition of short selling, as brokers have been doing `bullet-selling` that is prohibited in Korea in this way.

Securities analysts say that this case is not due to the short sale, but due to the lack of stock trading system and lack of internal control. However, this incident has raised the voice of the need to overhaul the short selling system, which was the public enemy of individual investors have.

Short selling is one of the investment strategies not only domestically but also overseas. It is an investment technique that borrows stocks that are not anticipated to fall in share prices and gains profits.

The government emphasizes the net worth of the system in that short selling is an important factor in the negative information about the companies reflected in prices and that irrational stock bubbles are blocked. Individual investors, on the other hand, are demanding the total abolition of the short selling system, as only institutions and foreign investors are able to make short sales and they are seeing the loss of share price due to information asymmetry.

Celltrion, listed on KOSDAQ prior to KOSPI, is one of the main targets of short selling and has suffered many damages. Currently, the short-selling balance is worth KRW3.2 trillion, about 10% of the total market capitalization. Samsung Securities Even though the short selling system emerged as a `hot potato`, the government is still cautious about the ban on short selling. Kim Dong-yeon, economic minister and finance minister, said on the MBC radio that "something has happened that should not be done." However, regarding the petition for abolishing the short sale, he said, "We should decide after seeing the result of the inspection."

Hwang Se-woon, a researcher at the Korea Institute for the Promotion of the Capital Markets Research Institute, said, "We should take a more careful approach to the prohibition of short selling." It is most important to strengthen the accessibility of individual investors in order to improve the short- .

By Kim Min Soo minsu@


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