HYBE Employees Forwarded To Prosecution On Charges Of Insider Trading, HYBE Issues Response

Published Categorized as Kpop
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It has been revealed that employees of HYBE have reportedly sold their shares based on undisclosed information before last year’s announcement of BTS’s temporary group activities suspension.

The Capital Market Special Prosecutor’s Office under the Financial Supervisory Service (FSS) stated on the 31st of May that after conducting an investigation under the guidance of the Seoul Southern District Prosecutors’ Office, they have forwarded the opinions of prosecution for indictment on three individuals, including a team leader affiliated with HYBE, on charges of violating the Capital Market Act [aka Insider trading].

According to the Special Prosecutor’s Office, these individuals were employees responsible for idol group-related tasks within HYBE’s label. They sold their shares before the information about BTS’s temporary group activity suspension was made public.

BTS announced the temporary suspension of their group activities through a YouTube video on June 14th last year.

The stock price of HYBE fell by 24.87% on the following day, June 15th last year.

It has been confirmed that the three employees avoided a total loss of 230 million won [$173,278] based on the closing price on the 15th.

The FSS pointed out that in this case, HYBE increased investor confusion by disclosing information about BTS’s temporary group activity suspension through an SNS video rather than through an official announcement or public disclosure.

The FSS emphasized that “listed entertainment agencies have a significant impact on the company’s stock price due to the activity plans of key artists” and that “companies should establish systems for properly disclosing relevant information to investors and strengthen internal controls to prevent employees from using undisclosed information, thus ensuring investor protection commensurate with their industry status.”

Furthermore, the FSS cautioned that “employees of listed companies and other insiders should be aware that they may face criminal penalties if they use undisclosed information they become aware of through their job duties for stock trading or provide it to others.”

Following the shocking report, HYBE issued a response, it reads:

Since the prosecution is ongoing against individuals under investigation, we cannot provide any comments from the company. The company has implemented management measures such as security oaths and precautionary guidelines for employees handling important information.
The company is sincerely cooperating within the necessary scope in response to information requests from investigative agencies. If illegal acts are confirmed through future prosecution investigations and criminal trials, appropriate measures corresponding to the unlawful actions will be taken against the employees in accordance with the company’s internal procedures.”

Source: (A), (B)

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