Raising the issue of ‘short selling as a form of stock price manipulation’ rather than short selling itself
Short selling surges immediately after RepickTwo’s FDA approval… On the 29th, 1.81 million shares, close to 800 Billion Won.
Company-level response following Chairman Jin Yang-gon's request for a public investigation
Securing specific data for order planning and execution… Plan to request investigation and investigation by special envoy etc.
HLB (028300) has begun to secure data to request an investigation and investigation by financial authorities in relation to suspicions of ‘stock price manipulation short selling’. Going one step further than simply requesting an investigation into abnormal transactions, the intention is to collect clues to determine who planned and executed the short selling order that caused the stock price to fall.
On the 1st, HLB Group requested Shareholders' Solidarity to provide related data and information through its official blog. The subjects include data that can be helpful in identifying specific order planners and executors, as well as video data and transaction records obtained by shareholders to request an investigation from KRX and others.
The company explained that it has been monitoring the short selling and trading flow of HLB stocks for a long time, and that there were circumstances that were difficult to view as normal investment and trading activities.
In particular, HLB claimed that a similar movement occurred at the same time quoting price that closed the market on this day. According to the company, the stock price, which was 40,750 won just before the simultaneous bidding, fell to 38,700 won when the simultaneous bidding began. Afterwards, as buying power flowed in, the stock price rose again to the 40,000 won level.
HLB and some shareholders claim that this pattern of selling orders and multiple trader counters operating as if they were one counter has been repeated for several years, with stock prices falling sharply at the same asking price. The position is that during this process, it is necessary to investigate whether there were any market manipulation transactions, including clear trading.
One HLB shareholder claimed, “80% of the sales that lower the stock price at the KRX selling window are short selling windows, and for them to operate as one window is a form of trading that would be impossible without a stock price manipulation planner from the short selling force.”
However, it is not possible to confirm the relationship between the actual ordering entity or accounts based solely on the transactions shown at the trader's counter. Whether orders from multiple counters were actually linked and whether there were unfair transactions such as clear trading or market manipulation are matters that financial authorities and investigative Institutional Investors must check based on specific order and transaction details.
Raising the issue of short selling that has persisted for several years... Recently, trading volume has also increased rapidly.
HLB and its shareholders have been raising issues with some short selling and trading patterns in its stocks since 2019. The issue was not the size of short selling itself, but rather the form of orders and transactions that appeared repeatedly at a specific time.
There has been a demand to check the actual orders and execution process due to the phenomenon that sell orders are concentrated at key times, such as when good news is announced, or similar transactions are repeated at a specific trader's window.
Recently, short selling transactions also increased significantly immediately after RepickTwo's FDA approval. HLB hit its upper limit at 39,700 won on the 28th of last month. The next morning, Nexttrade (NXT) rose to 49,900 won during the day, up 25.69% from the previous day. KRX also started up 17.38% and then rose more than 20% during the day.
According to related transaction data, HLB's short selling volume on the 29th was 1,817,687 shares and the transaction amount was approximately 780 Billion Won. The proportion of short selling calculated based on total trading volume, including NXT trading volume, was 10.39%.
If you look at only KRX transactions, the proportion changes. On the 29th, the short selling trading volume on KRX was 1,686,391 shares and the trading amount was approximately 724 Billion Won, accounting for 24.54% of the total KRX trading volume. The previous day, on the 28th, the proportion of short selling based on KRX was 39.65%.
This trend continued on the 1st. On this day, the short selling volume on KRX was 331,100 shares and the transaction amount was approximately 131 Billion Won, accounting for 28.05% of the total trading volume. [Source: Securities company HTS, HLB Short Selling trading status immediately after FDA approval. [Market Times Summary]
The HLB side is taking issue with the fact that stock prices rose to around 25% in NXT immediately after FDA approval, followed by large-scale short selling transactions in KRX, which also rose by more than 20% during the day. Based on KRX, the proportion of short selling was 39.65% on the 28th, 24.54% on the 29th, and 28.05% on the 1st. Based on this, HLB's position is that it is necessary to confirm the actual orderer and transaction process.
Six group companies, including HLB, met the requirements for designation as overheated short selling stocks, and short selling trading was restricted the following day, the 30th.
Regarding the trading on the 29th, an official in the securities industry said, “The short selling that poured into HLB throughout the day is beyond an unusual level and looks suspicious.” He added, “It is a form of trading that I do not understand why short selling is being done while suppressing the rising stock price.”
Shareholder Solidarity is also collecting reports and data on related transactions and plans to deliver this to the company and financial authorities.
What HLB takes issue with is not just the size of short selling. The core of the demand that has persisted for several years is to confirm what orders were placed at the time when the stock price moved significantly, and what the actual order holder and execution process were.
In 2019, HLB requested the Financial Supervisory Service to investigate related transactions, citing suspicions of stock price manipulation under the guise of short selling. Afterwards, HLB Group's shareholders' solidarity group 'Share Promotion' also filed a complaint with the financial authorities, saying that they suspected market manipulation in transactions at a specific dealer's window.
Since last July, this paper has continuously reported on HLB's short selling trading pattern and large sell orders that appeared at the same market closing price. At the time, KRX responded to our inquiry to the effect that it would be difficult to disclose whether abnormal transactions occurred for individual stocks or the status of monitoring progress.
“Order execution, not short selling itself”… Chairman Jin Yang-gon requests a public investigation
With the FDA approval of Refic2 on the 24th of last month, the issue came to the forefront again. Jin Yang-gon, chairman of HLB Group, who was announcing the approval of the FGFR2-targeting bile duct cancer treatment ‘Repicku’, publicly requested the financial authorities to investigate short selling-related transactions. [Source: HLB Official YouTube, HLB Group Chairman Jin Yang-gon reported the news of Repick2's US FDA approval on the 24th of last month and requested an investigation by financial authorities into transactions related to short selling.]
Chairman Jin claimed in a video at the time, “HLB Group has been under intensive attack from short selling for 7 years since 2019.”
At the same time, he said, “I am not trying to take issue with short selling itself,” and raised suspicions that long-term stock price manipulative trading took place in the process of receiving and executing short selling orders.
In particular, citing the fact that similar order forms were repeated through the same dealer window, financial supervisory Institutional Investors requested to look into the trading behavior of entities executing short selling orders.
However, it is not possible to confirm the actual order subject or order purpose through the trader screen alone. Even if a specific trader window appears repeatedly, it does not mean that the securities company in question is the final investor. Actual order and transaction details are an area that requires investigation by financial authorities.
Request for public investigation to ‘secure data’… Order planning and executor specific promotion
After Chairman Jin Yang-gon's request for a public investigation, HLB's response also became more concrete.
[Source: HLB Group official blog, HLB posted a notice on the 1st titled ‘Request for cooperation in responding to suspected unfair trading short selling’.]
HLB has decided to collect videos and transaction records individually secured by shareholders at the company level. In particular, they requested ‘data and information that can be helpful in planning specific orders and identifying and specifying executors.’
If we have been requesting the financial authorities and KRX to investigate suspicious transactions, this time we will directly collect data that can identify the planner and executor of the actual order. The plan is to proceed with factual verification and legal review of the data obtained, followed by an official investigation and request for investigation.
Whether there has actually been illegal short selling or market manipulation must be confirmed through an investigation by financial authorities and Institutional Investors. HLB plans to request a formal investigation and investigation from relevant Institutional Investors, including the Financial Services Commission and the Capital Market Special Judicial Police.
HLB said, “We will hold accountable and respond resolutely to the end through all possible legal means for illegal and unfair transactions that continue to damage corporate value and harm shareholders.”
