Hive "Suspicious of Abnormal Trading in SM Shares"... Financial Authorities "Investigating Unusual Trading Allegations"

Hive Requests FSC Investigation on Stock Trading... "Suspicion of Abnormal Purchases"

Following a complaint regarding abnormal trading related to SM Entertainment (SM) stock transactions, financial supervisory authorities and the Korea Exchange are monitoring the stock price movements to investigate potential unfair trading. Amid a management rights dispute and Hive's public tender offer, the financial authorities and the Korea Exchange stated on the 28th, "We are monitoring to determine whether there are any suspicions of unfair or abnormal trading."

[Image source=Yonhap News]

The financial authorities' actions became active on the morning of the 28th after Hive requested an investigation from the Financial Supervisory Service (FSS). Hive stated, "On the 16th, abnormal purchase activity amounting to 2.9% (683,398 shares) of the total issued shares of SM occurred at IBK Investment & Securities Pangyo branch," and requested the FSS to examine violations of the Capital Markets Act. Hive claimed that the transaction took place as SM's stock price surged from the public tender offer price of 120,000 KRW to 130,000 KRW, strongly suspecting that it was conducted with the intent to manipulate the market price and obstruct Hive's public tender offer.

In fact, SM's stock price, which had been below 120,000 KRW until the 14th, soared to an all-time high of 133,600 KRW on the 16th, the closing date for the public tender offer subscription. Other corporations net purchased 1,087,801 shares on the market, and at the IBK Pangyo branch identified by Hive, 15.8% of the total daily trading volume of SM shares was bought that day. The stock price closed at 127,600 KRW, up 6.07% from the previous day.

According to the Capital Markets Act, trading or consignment aimed at inducing the trading of listed securities by manipulating prices is illegal. Trading or consignment intended to fix or stabilize the price of listed securities is also prohibited.

Within the industry, there is an interpretation that Hive's public tender offer failed due to price fluctuations caused by net purchases from other corporations.