Ex-HYBE employees charged with insider trading before BTS's hiatus announcement
Three ex-employees of HYBE subsidiaries, identified as Mr. A (32), Mr. B (35), and Mr. C (39), are on trial for alleged insider trading linked to K-pop group BTS's military enlistment announcement in 2022. The Seoul Southern District Prosecutors's Office's Financial Investigation Division 1 charged the trio with violating the Capital Markets Act on Thursday. They are accused of selling company stocks before the public release of BTS's enlistment news, thus profiting from non-public information and causing harm to HYBE.
First, understand what the term means exactly
Per Investopedia, "Insider trading involves trading in a public company's stock or other securities by someone with non-public, material information about the company." "Insider transactions are legal if the insider makes a trade and reports it to the Securities and Exchange Commission, but insider trading is illegal when the material information is still non-public." "Material information is any information that could substantially impact an investor's decision to buy or sell the security."
The accused allegedly exploited positions for personal gain
The accused were part of HYBE's protocol and visual creative teams, where they allegedly learned in advance about BTS's military enrollment and activity suspension plans. The prosecution claims that they were in daily contact with BTS members before committing the alleged crime. By selling their company shares a day before the public announcement, they reportedly avoided a total loss of 230M won ($1,66,115.45), constituting illegal insider trading.
Details of the alleged insider trading unveiled
Mr. A and Mr. B sold all their HYBE shares, 500 and 2,300 respectively, a day before BTS's announcement; this move reportedly saved Mr. A from a loss of 33.39Mwon ($24,111.79) and Mr. B from a loss of 153.79M won ($1,11,055.76). Additionally, Mr. C sold half of his HYBE shares on June 14, 2022, saving 45.93M won ($33,164.61). A day after BTS's announcement, HYBE suffered a loss of over $1.44B as its stock price declined by 24.87%.
Prosecution transfers case to Financial Supervisory Service
The Capital Market Special Judicial Police of the Financial Supervisory Service transferred the three accused former HYBE employees to the prosecution for indictment in May 2023. A prosecution official emphasized that the band's enlistment information was a company secret known only to a few authorities. "This is a security issue that only high-ranking officials and a small number of people involved in the work can know," the official told KBS.
BTS enlistment announcement and subsequent events
BTS announced their military enlistment on June 14, 2022, through a pre-recorded FESTA Dinner video on BANGTANTV (YouTube). The group members revealed plans to enlist together to return sooner and resume group activities. They also shared plans to release solo albums before enlisting individually. Jin enlisted in December 2022, followed by J-hope in April 2023, Suga in September 2023, while Namjoon, Taeyung, Jimin, and Jungkook enlisted together in December 2023. Jin has already completed his service.
