South Korea’s financial watchdog plans to look into Morgan Stanley over its large-scale sell order of SK hynix Inc. shares, which was made two days before issuing a report that downgraded the chipmaker’s rating, according to an industry source Sunday.
Morgan Stanley published a report on Sept. 15 that cut its target price of SK hynix shares to 120,000 won (US$90.10) from 260,000 won and downgraded its rating on the chipmaker, citing bleaker price outlooks for memory chips.
Two days prior to the report issuance, the investment bank was found to have placed a sell order for around 1.01 million shares of the South Korean chip giant, leading to speculation of potential insider trading.
According to sources, the Financial Supervisory Service (FSS) plans to examine whether Morgan Stanley violated its obligations under the Capital Markets Act concerning the handling of research and analysis reports.
Last week, the Korea Exchange launched a regulator probe into circumstances surrounding Morgan Stanley’s moves. I
f any suspicious transactions are identified, the exchange will hand over the data to the FSS for further investigation.
The Capital Markets Act prohibits publishers of market analysis reports from trading of financial investment products subject to their analyses for 24 hours in order to prevent insider trading based on non-public information.
An FSS official said the watchdog will look into any suspicions involving compliance with regulations concerning the preparation and distribution of research reports, separate from the probe by the Korea Exchange.
Source: Yonhap News Agency