South Korea's Financial Services Commission said it willoverhaul rules on market disclosure and short selling following the delayeddisclosure of a scrapped deal involving Hanmi Pharmaceutical, The Korea Herald reported Oct. 6, citingthe regulator's chairman, Yim Jong-yong.
During a parliamentary audit on the regulator, Yim vowed todevise measures to prevent losses from retail investors due to delayeddisclosures on deals as soon as possible. His comments came after the delayeddisclosure of a termination of a partnership between Hanmi Pharmaceutical andGermany's Boehringer Ingelheim to share a license to manufacture acancer-fighting drug, which was announced Sept. 30.
Retail investors were only informed of the scrappedpartnership around 29 minutes after the market opened, and 14 hours after Hanmiwas informed of the termination. Retail investors were also anticipating afurther rise in Hanmi shares given its new deal with Genetech, a member of theRoche Group, which was announced Sept. 29.
Meanwhile, institutional investors made profits from short sellingHanmi shares. The current system discloses short-selling trades three daysafter a transaction. Yim said that since most of the short sellers were foreigninstitutional investors, delayed disclosures were unavoidable given the timedifference.
The FSC has partnered with the Financial Supervisory Serviceand Korea Exchange to investigate the possibility of a leak of information onHanmi's and Boehringer Ingelheim's deal and suspicions of insider trading.
Yim also flagged rising household debt as a problem duringthe audit, pledging to curb the growth in lending by nonbanking institutions,such as credit companies.