Korea plans to clamp down on stock market manipulation and trading on undisclosed information after $26 billion was wiped from the value of the nation’s listed companies in a matter of minutes last November.

The Financial Services Commission is drafting revisions to capital-markets laws to increase penalties, said Ernst Lee, a spokesman at the regulator. The revisions, which will require approval by the National Assembly, may be submitted as early as June and would help seize profits made from “unfair trading,” Lee said by phone today.

Deutsche Bank AG received in February the heaviest penalty ever imposed on a securities firm in South Korea when it was banned from trading shares and derivatives for its own account for six months, starting in April. The regulator said the bank’s employees conspired to manipulate the market on Nov. 11 by selling 2.44 trillion won ($2.2 billion) worth of shares in the last minutes of trading that day to make gains from “speculative” derivatives positions built in advance.

Michael West, a Hong Kong-based spokesman for Deutsche Bank, was not immediately reachable for comment via telephone and e-mail today. Scrutiny of equity-market swings has increased globally since a 20-minute drop in U.S. equities on May 6 last year briefly erased $862 billion of market value.

Foreign investors’ combined holdings in the South Korean stock market account for 36 percent of total market value, according to data from Korea Exchange Inc. Global funds sold more Korean stocks than they bought today for a 10th day, the longest losing streak since March 2009, bourse data show.

The benchmark Kospi stock index fell 0.6 percent to 2,049.01 at 1:51 p.m. in Seoul. The gauge has fallen 0.1 percent this year, compared with the MSCI Asia Pacific Index’s 4.7 percent slump. 

(Bloomberg)