HYBE employees accused of insider stock trading over BTS

Shares in the company behind BTS turned south three days before the boy band's announcement of a temporary split

BTS was the first South Korean music group to win as American Music Award's Artist of the Year
BTS was the first South Korean music group to win as American Music Award's Artist of the Year
Han-Gyeol Seon 2
2023-05-31 16:43:01 always@hankyung.com
Korean stock market

Three HYBE employees on Wednesday were accused of insider stock trading, allegedly selling the South Korean entertainment giant's shares before K-pop sensation BTS's surprise announcement last June of a temporary split.

The regulatory Financial Supervisory Service (FSS) said the three unidentified employees avoided a total of 230 million won ($174,000) in losses by unloading the stock ahead of the news about BTS’s solo career launch plans.

They were in charge of managing HYBE’s idol groups. The FSS accused them of violating the capital markets act.

The probe was conducted under the supervision of the Seoul Southern District Prosecutors’ Office. Prosecutors will take over the case to charge the three HYBE employees with the alleged insider stock trading.

The regulator launched the investigation amid growing suspicion the BTS news might have been leaked in advance.   

On June 14, 2022, the seven-boy band’s plan to take a hiatus as a group was made known after a pre-recorded video came out through a YoutTube channel.

The news sent HYBE’s share price nosediving 24.87% to close at 145,000 won the following day.

But the stock had already been on a downward spiral in the previous three trading days.

On June 13 alone, HYBE shares plunged 11% with no clear reason, versus a 3.52% drop in the benchmark Kospi index. It was known that the video stream had been recorded several days before its release.

Jimin of BTS became the first South Korean solo act to hit No.1 on Billboard’s main singles chart Hot 100 in April
Jimin of BTS became the first South Korean solo act to hit No.1 on Billboard’s main singles chart Hot 100 in April

The FSS stressed that the way that HYBE released the global superstar group’s decision caused confusion among investors.

The entertainment powerhouse disclosed the news on a social media platform, instead of in a public disclosure or official announcement.

The FSS further warned that popular artists’ career plans are so important for listed entertainment agencies that it could have a significant impact on their share prices.

The regulator urged them to disclose such information in the right manner and draw up investor protection measures such as keeping its employees from using insider information.

“It needs to be noted that insiders in listed companies could face criminal charges if they use undisclosed information related to their work to trade (their companies’) stocks,” the FSS said in a statement.

Write to Han-Gyeol Seon at always@hankyung.com

Yeonhee Kim edited this article.
#HYBE #entertainment #BTS #insiderstocktrading #FSS #FinancialSupervisoryService #capitalmarketsact

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