Multiple HYBE Employees Face Insider Trading Charges Related to BTS Military Hiatus

HYBE insider trading
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HYBE insider trading
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Photo Credit: HYBE

At least three HYBE employees face an investigation for insider trading related to BTS’ hiatus due to members’ mandatory military service.

Three HYBE employees are facing charges related to insider trading, financial authorities said Wednesday. The Financial Supervisory Service (FSS) alleges that multiple HYBE employees sold their shares of company stock after learning before the public that popular K-pop group BTS would be taking a break.

The announcement of the band’s hiatus reached the public on June 14, 2022, and the company’s stock sank nearly 25% the following day — although it had been on a downward spiral the three trading days prior. 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 HYBE’s announcing the group’s hiatus only through videos posted to social media made it difficult for investors to make informed investment decisions. Regulators launched an investigation amid growing suspicion that the BTS news may have leaked in advance.

The accused employees are estimated to have made around $173,600 through the trade by unloading the stock ahead of the media announcement. FSS urged entertainment agencies listed on the stock market to “establish a system in which information is disclosed to the investors openly, in a proper manner, and strengthen internal control so its employees cannot utilize (insider) information.”

BTS officially announced last year that it would take a break from group activities in a video uploaded to the band’s YouTube channel. At the time, the group’s members said they decided to take a break to strengthen individual members’ solo activities. 

Still, market experts and fans widely speculated the underlying reason was some band members’ imminent military duties. Jin began his military service in December, while J-Hope started this April.

Meanwhile, BTS’ hiatus has proved lucrative for the solo careers of members who have yet to begin their mandatory military service. Member Jimin became the first South Korean solo act to reach No. 1 on the Billboard Hot 100 in April.