Controversy Over Three HYBE Employees Trading Shares Before Stock Price Plunge Using Insider Information
According to a Chosun Ilbo report on the 30th, investigative authorities have reportedly been investigating suspicions that some HYBE employees sold their HYBE shares just before BTS announced their group activity hiatus via YouTube in June of last year.
BTS declared their group activity hiatus through their official YouTube channel on June 14 of last year. The following day, on the 15th, HYBE’s stock price dropped 24.87% from the previous trading day. As HYBE’s stock price had been declining starting three trading days before the video was released, some raised suspicions that insider information may have been used for trading. From June 10 to June 14, just before the video was released, HYBE’s stock price fell for three consecutive trading days.
On the 31st, the Financial Supervisory Service’s Capital Market Special Judicial Police announced that after investigating three HYBE employees who traded stocks using insider information, they referred them to the prosecution with recommendations for indictment on the 26th.
According to the Special Judicial Police, when these employees learned through their work that BTS would temporarily suspend group activities, they sold off their existing HYBE shares before this news became public.
One of the three is a team leader-level employee at HYBE. It was confirmed that the three avoided losses totaling approximately 230 million won by using insider information. The maximum loss avoided by a single individual was 150 million won.
The Special Judicial Police stated, “The company in question released the information ambiguously through social media videos instead of disclosing it or making an official announcement, which heightened investor confusion,” adding, “Given that the activity plans of key artists at listed entertainment agencies are major business matters with significant impact on stock prices, such companies should establish systems to ensure that relevant information is disclosed in a timely manner through proper channels.”
The Special Judicial Police charged the three HYBE employees with violating Article 174 of the Capital Markets Act. The Special Judicial Police emphasized, “Insiders such as employees of listed companies who use undisclosed information obtained through their duties for stock trading, or allow others to use such information, are subject to criminal prosecution.”