A number of Hybe Corporation’s staff were referred to the prosecution after they were accused of insider trading, which violates the country’s Financial Investment Services and Capital Markets Act. The employees were said to have sold their Hybe shares last year almost immediately after learning that the BTS boy band is taking a break.
As mentioned on Korea Bizwire, the employees' move to sell their shares is considered an insider trading offense because BTS’ hiatus was a piece of confidential information at that time. The band’s temporary halt of activities as a group was not yet publicly announced thus, only some employees of the company may have come to know about it.
As requested by the Seoul Southern District Prosecutors Office, the financial regulator in South Korea launched an investigation into the suspicion of insider trading, and on Wednesday, May 31, the Financial Supervisory Service (FSS) said it has already passed the case to the prosecution after probing the claims.
The FSS pointed out that Hybe Corporation announced BTS’ hiatus via YouTube streaming. The company did not issue an official statement like it always does, so the announcement caused confusion among the investors as well.
On June 16, 2022, one day before the company’s announcement of BTS break from activities, Hybe’s shares dropped by almost 25%. Three of the company’s staff were able to avoid losses amounting to KRW230 million or about $173,910 because, as the FSS alleged, they already knew about the hiatus, so they sold their shares before the numbers went down.
“The primary artists and their activities are integral to the management of a listed entertainment company and can significantly impact company share prices,” Korea’s FSS stated.
Meanwhile, Korea Joongang Daily reported that to avoid similar incidents, the FSS is urging entertainment companies that are listed on the stock market to create a system where all the information should be openly shared with investors, too, especially details that were already relayed to some employees. The FSS said that this system will “strengthen internal control so its employees cannot utilize inside information."
Photo by: Jason Briscoe on Unsplash


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