Hive "Abnormal SM Stock Trading"... Request for Investigation by Financial Supervisory Service

[Image source=Yonhap News]

HYBE announced on the 28th that it has requested the Financial Supervisory Service to investigate the abnormal large-scale purchase of SM Entertainment (hereinafter SM) shares, suspecting a violation of the Capital Markets Act.

HYBE stated, "It should be noted that the transaction of SM shares through IBK Investment & Securities Co., Ltd. (hereinafter IBK) Pangyo branch on the 16th occurred at a critical moment when SM's stock price surged from 120,000 KRW to 130,000 KRW," adding, "We strongly suspect that this was done to manipulate the market price and obstruct HYBE's tender offer."

SM's stock price traded below 120,000 KRW from February 10, when HYBE announced the tender offer, until the 14th. On the 16th, it soared to an all-time high of 133,600 KRW since SM's listing. On that day, IBK Pangyo branch purchased 683,398 shares, accounting for 15.8% of SM's total daily trading volume (2.9% of SM's total issued shares).

At IBK Pangyo branch, a total of 403,132 shares were purchased while SM's stock price rose from 122,100 KRW to 125,800 KRW, and 222,923 shares were purchased while the price increased from 126,700 KRW to 129,800 KRW.

Regarding this, HYBE said, "IBK's trading activities are suspected of violating the Capital Markets Act and appear to have disrupted market order through abnormal transactions," emphasizing, "A thorough investigation and measures by the Financial Supervisory Service are necessary to prevent market distortion and protect innocent investors."

Meanwhile, HYBE's tender offer to purchase 25% of SM's issued shares at 120,000 KRW per share will end on the 28th. Although the scheduled tender offer closing date is March 1, the actual closing date is the 28th since March 1 is a public holiday.

Since the 10th of this month, HYBE has been conducting a tender offer to acquire 5,951,826 shares, equivalent to 25% of SM's issued shares, at 120,000 KRW per share. However, since SM's stock price exceeded 120,000 KRW from the 15th, it is highly likely that HYBE did not meet its target volume in the tender offer.

HYBE purchased 14.8% of shares from former Chief Producer Lee Soo-man, becoming SM's largest shareholder. HYBE's plan for acquiring SM was to secure stable management rights by acquiring up to 25% through the tender offer.