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On Tuesday, October 22, HYBE employees who were accused of insider trading amidst BTS' military enlistment following their hiatus, were gathered for the first court hearing. The court hearing was held by the 13th Criminal Division of the Seoul Southern District Court, which was overseen by Judge Kim Sang-yeon.
According to the Korean news outlet Newsis, the court hearing gathered a total of three employees. These three individuals are charged under the Capital Market Act. They are accused of selling their company shares before the official announcement of BTS' military enlistment.
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The employees had reportedly gotten advance notice of the BTS members' upcoming military enlistment and before the news got out officially, they had sold their company shares to avoid major financial losses.
As per Allkpop,
“While the defendants were aware of BTS member Jin’s enlistment in the military, they were not informed of the entire group’s hiatus or the specific timing of its announcement."
In addition, as per the attorneys,
“They did not know whether or not enlistment was considered material, non-public information,” The Korea Herald reported.
These accusations were denied by the employees. Their representative attorneys stated that the employees were aware of the BTS members' enlistment, but they were not aware of the break that the members would be taking from their group activities, at least at the time of the official announcement.
Moreover, they also argued that the employees were unaware that the enlistment itself could be regarded as significant unpublished information under the law.
Prosecution holds HYBE employees accountable for allegedly avoiding losses by selling shares prior to BTS' official hiatus announcement
On October 22, during the first court hearing of the accusations raised against three HYBE employees, they were charged with insider trading. Given that the agency faced a decline in its shares worth following BTS' hiatus announcement, speculations on these employees taking advantage of the same before the official announcement began to land on the internet.
When a court case was filed regarding the same, the employees denied the charges. Regardless, the prosecution concluded that the employees became aware of BTS' enlistment between late May and early July 2022. They acted by selling their shares before BTS announced their hiatus. Therefore, they were accused of avoiding losses that amounted to approximately KRW 233 million.
The investigators of the case allegedly revealed that these employees were able to gain information about BTS' military enlistment and hiatus in advance due to their roles in HYBE’s visual creative and protocol departments. These departments are known to manage the various artists' appearances and schedules.
The next court hearing is scheduled for November 26. During the same, the trial will continue to uncover whether these employees' act of selling their shares based on non-public and confidential information is illegal or not.
Previously, the Financial Supervisory Service's Capital Market Special Judicial Police, which was in charge of the case, sent the three employees to prosecution in May 2023 for indictment. This was followed by the Seoul Southern District Prosecutors' Office's Financial Investigation Division 1's decision to send the employees to trial without detention in June 2024.
