Citigroup and Barclays Face Penalty for Naked Short Selling

Core Viewpoint - Citigroup Inc. and Barclays PLC have been fined for engaging in naked short selling activities as per South Korea's Financial Supervisory Service recommendations [1][3]. Group 1: Penalties and Violations - Citigroup was fined 4.7 billion won ($3.2 million) and Barclays received a penalty of 13.7 billion won ($9.5 million) for their involvement in naked short selling [3]. - The initial proposed penalties were significantly higher, with Citigroup facing a potential 20 billion won and Barclays 70 billion won, but these were reduced by approximately 80% after the Securities and Futures Commission's review [4]. Group 2: Regulatory Context - South Korea has banned naked short selling since November 2023, with plans to lift the ban by the end of March 2025 under stricter oversight [2]. - Both banks utilized a "post-borrowing" method, executing short sales before securing borrowed shares, which led to regulatory scrutiny but was ultimately deemed without intent to violate rules [4]. Group 3: Industry Impact - Other major banks, including HSBC Holdings and BNP Paribas, also faced penalties for similar violations, with a combined penalty of 26.5 billion won imposed on them in November 2023 [5]. - Citigroup and Barclays have seen their stock prices increase by 12.4% and 21.1%, respectively, over the past six months [6].