Morgan Stanley’s Hynix Share Sale Order Subject to FSS Review, Yonhap Reports – BNN Bloomberg

(Bloomberg) — Morgan Stanley is facing regulatory scrutiny over a sell order for SK Hynix Inc. shares placed before a downgrade report was released, Yonhap News reported, citing unnamed industry sources.

The Financial Supervisory Service plans to investigate whether there was fraudulent activity related to trading in SK Hynix shares, according to a Yonhap report. The regulator will also investigate whether Morgan Stanley violated its obligations under capital markets laws in connection with the case, it said.

The new opinion comes after the Korea Exchange began scrutinizing Morgan Stanley’s accounts to uncover any possible irregularities in SK Hynix stock trading, putting the company under pressure in a country where the prices of merged stocks often swing wildly following the release of ratings reports from overseas brokerages.

Calls to Morgan Stanley were not answered Sunday. FSS declined to comment.

Following a report on SK Hynix’s downgrade by a U.S. broker on Sept. 15, shares of the Korean chipmaker fell more than 11% on Thursday when the market reopened from the Chuseok break. They ended the day 6.1% lower.

On September 13, two days before the report was released, Morgan Stanley’s Seoul branch placed an order to sell about 1.01 million shares, about three times more than the day before, according to Yonhap.

Morgan Stanley downgraded SK Hynix shares from “overweight” to “underweight” and cut its target price by more than half from 260,000 won to 120,000 won.