The Seoul branch of Goldman Sachs is under scrutiny by Korean authorities on any illicit intentionality behind the delivery failure in the 6 billion won ($5.6 million) of short-sale orders.

According to the Financial Supervisory Service on Monday, the Seoul branch arranged a short-sale trade for its New York office on May 30, but shares in 20 stocks did not get delivered on time.

The shares that left the short sellers “naked” amounted to 1,387,968 shares worth about 6 billion won at the time.

Short-sellers borrow shares then sell them on expectation that they can buy the shares at a lower price and profit from the difference. Under Korean law, short sale is subject to a two-day settlement period.

Goldman Sachs International said it executed a short sale for the outstanding 19 shares last Friday and vowed to take over the remaining one by Tuesday.

FSS regulators would investigate the Seoul branch until June 15. Goldman Sachs claims it is an order error.

The FSS moved fast to investigate Goldman Sachs as the case follows a major fat-finger error by Samsung Securities in April in which the company placed 1,000 shares in every employee holding in treasury stock instead of 1,000 won in cash dividend. It raised suspicion that brokers may be executing short-sales on unavailable or un-borrowed shares.

By Jin Young-tae and Kim Hyo-jin

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