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Former HYBE employees were charged on June 27, 2024, for allegedly selling HYBE stock prior to BTS' 2022 hiatus announcement. According to KBS, the Seoul Southern District Prosecutors' Office's Financial Investigation Division 1, under Director Kwon Chan-hyuk, declared that three former employees of HYBE subsidiaries - including Mr. A (32), Mr. B (35), and Mr. C (39) - violated the Capital Markets Act.
They were aware that the BTS members would announce their military enlistment and a hiatus of group operations via a video release. It is claimed that they broke the Capital Markets Act when they sold their company's stock right before the video was made public and the District Prosecutors' Office charged them with premeditated plotting to harm HYBE and profit from it.
The prosecution claimed that the three accused (names hidden for privacy concerns) were part of the protocol and visual creative (VC) teams at HYBE. KBS reported that the three men used their positions at HYBE to learn about BTS' military enrollment and activities suspension.
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The prosecution further stated that they kept in touch with the BTS members daily before committing the crime. It was discovered that they avoided a total loss of 230 million won (1,66,115.45 USD) through this act.
HYBE's former employees allegedly exploited the knowledge of BTS' enlistment for illegal insider trading
Earlier, on June 14, 2022, at 9 PM, BTS released a video on their official YouTube channel, BANGTANTV, announcing the group's brief hiatus owing to their military enlistment. The band declared that they would recommence group activities by late 2025 after returning from the military. On June 15, 2022, HYBE's stock price drastically declined by 24.87% and they lost 2 trillion won (over 1.44 billion USD).
HYBE's former employees A (32), B (35), and C (39) were allegedly aware that the video would be released between May and June 2022. They reportedly offloaded their respective company shares a day before to avoid loss and made a profit via illegal insider trading of company shares and violating the law.
For the unversed, insider trading occurs when someone gains access to the company's or non-public trading secrets and uses that sensitive company information to sell off shares to avoid losses. Having access to confidential information about a company gives investors an unfair advantage, which is an act that is both unlawful and unjust.
Newsis reported on June 27, 2024, that further investigation by District Prosecutors' Office's Financial Investigation Division 1 revealed that on the day before BTS' video was released, Mr. A and Mr. B sold all 500 and 2,300 shares of HYBE stock, respectively. Mr. A avoided a loss of 33.39 million won (24,111.79 USD) and Mr. B averted a loss of 153.79 million won (1,11,055.76 USD).
Additionally, Mr. C sold 1,000 of his 2,497 shares of HYBE stock on the afternoon of June 14, 2022, before the video was released. Investigation revealed that he prevented a loss of 45.93 million won (33,164.61 USD).
A prosecution official told KBS that in May 2023, the Financial Supervisory Service's Capital Market Special Judicial Police transferred the three former employees from HYBE subsidiaries to the prosecution for indictment. The official further highlighted the breach of privacy since the information about BTS' enlistment was a company secret and was known by a handful of company authorities.
"This is a security issue that only high-ranking officials and a small number of people involved in the work can know. The video is also sensitive information that was disclosed after several meetings," (as reported by KBS).
In other news, BTS announced their enlistment news on June 14, 2022, with a pre-recorded FESTA Dinner video on BANGTANTV (YouTube). The members revealed that they planned to enlist together to be able to come back sooner and resume group activities. Namjoon stated that, in order to provide their fans with more content, they will use the time 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.
