Several HYBE employees face insider trading charges related to BTS’ military hiatus

Photo credit: HYBE

At least three HYBE employees are under investigation for insider trading related to BTS’ hiatus due to members’ military service.

Three HYBE employees are charged with insider trading and financial transactions authorities said Wednesday. The Financial Supervisory Service (FSS) alleges that several HYBE employees have sold their company shares after learning from the public that popular K-pop group BTS was going on hiatus.

The announcement of the band’s hiatus hit the public on June 14, 2022, and the company’s stock plummeted nearly 25% the following day — despite spiraling downward for the previous three trading days. HYBE shares plunged 11% on June 13 for no apparent reason, but BTS recorded the announcement video several days before its release.

Financial authorities pointed out that it was difficult for investors to make informed investment decisions as HYBE only announced the group’s pause via videos posted on social media. Regulators launched an investigation as suspicions grew that the BTS news may have been leaked in advance.

It is estimated that the accused employees made around $173,600 from trading by offloading the stock prior to the media announcement. FSS called on listed entertainment agencies to “establish a system where information is disclosed openly and appropriately to investors and to strengthen internal controls to prevent their employees from using (inside) information”.

BTS officially announced last year that they were taking a break from group activities in a video uploaded to the band’s YouTube channel. The members of the group said at the time they decided to take a break in order to boost individual members’ solo activities.

Still, market pundits and fans widely speculated that the reason for this was some band members’ upcoming military service. Jin began his military service in December while J-Hope began this April.

Meanwhile, BTS’ hiatus has proven lucrative for the solo careers of members who haven’t yet started their military service. Member Jimin became the first South Korean solo act to reach #1 on the Billboard Hot 100 in April.