Credit Suisse’s Short Stock Selling Being Probed

Prosecutors asked immigration officials yesterday for information on the visit of Credit Suisse Group’s Hong Kong branch president to Korea to probe the allegation that the group conducted short stock selling and sold borrowed securities.

Travel bans were also put on six to seven Korean nationals, including the executives of a KOSDAQ-listed company who promised to lend stocks while issuing convertible bonds via the group and former senior executives of a Korean securities company in charge of issuing convertible bonds.

Executives of Credit Suisse’s Korean branch are not subject to a travel ban since they are considered to follow orders from the Hong Kong branch.

A prosecutor said Credit Suisse has a practice of gaining profits through a side agreement under which it borrows securities of a KOSDAQ-listed company in exchange for acquisition of overseas convertible bonds and repaying the borrowed securities by purchasing them when their price falls, and this runs counter to Korea’s securities law.

needjung@donga.com