SEOUL-South Korea’s Financial Supervisory Service (FSS) is set to investigate Morgan Stanley following a large-scale sell order of SK hynix Inc. shares executed shortly before the firm downgraded the chipmaker’s stock rating.:outh Korea’s Financial Supervisory Service (FSS) is set to investigate Morgan Stanley following a large-scale sell order of SK hynix Inc. shares executed shortly before the firm downgraded the chipmaker’s stock rating.
According to Yonhap News Agency, Morgan Stanley issued a report on September 15 that significantly lowered the target price for SK hynix shares from 260,000 won to 120,000 won (approximately $90.10), while also downgrading its rating due to a pessimistic outlook on memory chip prices. Notably, this report was preceded by a substantial sell order from Morgan Stanley two days earlier, involving approximately 1.01 million shares of SK hynix. This sequence of events has raised concerns over potential insider trading.
The FSS is specifically looking into whether Morgan Stanle
y breached any rules under the Capital Markets Act related to the handling of research and analysis reports. This act mandates a 24-hour moratorium on trading financial investment products by publishers of market analysis reports to prevent trading based on non-public, price-sensitive information.
Furthermore, last week, the Korea Exchange initiated a regulatory probe into the transactions surrounding Morgan Stanley’s actions. Should this investigation uncover any irregularities, the findings will be forwarded to the FSS for more extensive examination.
An official from the FSS stated that the inquiry would focus on compliance with regulations governing the preparation and distribution of research reports, which is separate from the ongoing investigation by the Korea Exchange.