Three former employees of HYBE and its subsidiary labels have been sentenced for insider trading related to BTS's military enlistment announcement and subsequent hiatus from group activities. The Seoul Southern District Court handed down suspended prison sentences to the individuals who sold HYBE shares just before BTS revealed their break on June 14, 2022.
The convicted individuals include a 37-year-old, Mr. Kim, formerly employed by Source Music, who received a 10-month prison sentence suspended for two years. Kim was also fined 231 million KRW (approximately $167,000 USD). Additionally, Mr. Lee (33), a former employee of BIGHIT MUSIC, and Mr. Kim (41), a former staffer at BeLift Lab, each received six-month prison sentences, suspended for two years. Lee was fined 51 million KRW (approximately $47,000 USD), while the other Kim was fined 65 million KRW. The court also ordered them to forfeit an amount equivalent to the losses they avoided by trading on undisclosed important information.
The insider trades occurred just before BTS's announcement of a temporary hiatus as all seven members prepared to serve in South Korea's military. The announcement was made in a video on June 14, 2022. Following the video's release, HYBE's stock plummeted nearly 25%, marking its worst single-day fall on record. The employees are accused of avoiding losses of about 230 million won by selling all their HYBE stocks after knowing in advance about the announcement.
The court emphasized the sensitivity of the information, stating, "In the entertainment industry, an artist's group activity directly impacts company revenue. The suspension of BTS's activities was highly sensitive, material information." The court added, "This crime undermines the fairness of the capital market and warrants strong public condemnation."
In a separate but related development, an airline crew member was indicted for allegedly selling BTS members' flight information to brokers. The Seoul Metropolitan Police Agency's cybercrime unit apprehended three suspects, including an airline employee, for breaching the Personal Information Protection Act by leaking sensitive travel details of BTS and other celebrities in exchange for millions. Authorities traced the suspects' financial transactions and confirmed their operations, which involved brokers selling data to fans through social media platforms and chat rooms. HYBE has vowed strict legal action against such breaches of privacy.
