The Seoul Administrative Court's Administrative Division 2 (Presiding Judge Gong Hyun-jin) ruled against UBS (formerly Credit Suisse) in a recent lawsuit filed against the Securities and Futures Commission under the Financial Services Commission to cancel a penalty surcharge imposition.

Previously, in July 2024, the Securities and Futures Commission imposed penalty surcharges totaling approximately 16.94 billion won on Credit Suisse for violating the Capital Markets Act by selling 60.33 billion won worth of stocks it did not own in a naked short-selling transaction.

Including the amounts imposed on affiliates, the total penalty subject to the lawsuit reached 27.1 billion won, marking the largest scale since the naked short-selling penalty system was introduced in 2021.

UBS, which acquired Credit Suisse and inherited the penalty disposition, filed the administrative lawsuit.

The company argued that the stocks in question were not borrowed shares, but rather shares provided as collateral, meaning ownership still remained with the company and thus did not constitute short selling.

However, the court did not accept the company's argument.

The court judged that ownership of the stocks cannot be deemed to remain with Credit Suisse simply because they were provided as collateral.

It explained that collateral is merely the purpose of a transaction, and ownership can vary depending on the contract terms and legal form chosen by the parties.

Accordingly, the court found that ownership was transferred when Credit Suisse lent the shares to a domestic securities firm, and selling them before receiving them back constitutes short selling.

(Photo: Yonhap News)