HYBE JUST REVEALED A SET OF EVIDENCE AGAINST MHJ, FILED A COMPLAINT, MAY 14

NOTE: I will try to explain the technicalities and some of the legal aspects of this. If you have questions, let me know.

On May 14, Hybe submitted a formal complaint to the Financial Supervisory Service (FSS), seeking an investigation into alleged violations of the Capital Market Act. These violations include spreading false information, market manipulation, and insider trading.

The complaint accuses a foreign securities analyst, identified only as Mr. A, of several infractions. Recently, Mr. A had recommended purchasing Hybe shares based on his analysis, which includes evaluating upcoming artist activities and their potential impact on the company's stock.

This complaint follows an interim audit report dated March 25, in which Hybe claimed to have discovered concrete evidence of a planned management takeover. The report suggested that confidential information pertaining to this plan was found in the possession of one of the auditees, along with details of meetings with external investors.

Hybe's allegations against Mr. A include:

• Providing opinions on the management takeover plan.

• Suggesting modifications to the shareholder agreement between Hybe and Min Heejin.

• Organizing meetings with foreign investors to facilitate the sale of Ador.

According to Hybe, Mr. A undertook these actions at the behest of Mr. L, a pivotal figure in the alleged management takeover scheme. Previously associated with Hybe, Mr. L moved to Ador earlier in the year. He is accused of divulging trade secrets, such as artist contracts, and crafting a strategy to compel Hybe to sell Ador.

On April 17, Mr. A reportedly arranged for a foreign investor, visiting South Korea to discuss potential investments with Hybe, to meet with Ador executives before their scheduled meeting with Hybe. This contradicts claims by CEO Min Heejin that she had not met with any investors.

Text messages between Mr. L and CEO Min reveal their discussions about the investor meeting, touching on Ador's performance and future plans without disclosing excessive details.

Hybe contends that Mr. A acted as an informal advisor to Ador's management during the takeover planning, recommending legal actions against other labels and Hybe itself. He also advised CEO Min regarding options in the shareholder agreement, encouraging her to push for a significant increase in the valuation multiplier from 13 times to 30 times the operating profit.

Hybe alleges that Mr. A’s analysis and recommendations caused significant business losses, tarnished the artists’ reputations, and overall devalued the company, leading to a drop in Hybe's share price. This situation has raised concerns among securities industry professionals about the ethical implications of an analyst using undisclosed information for personal benefit.

Ador has defended itself against these allegations, describing Hybe's FSS complaint as a vindictive attempt to discredit and displace the management team. Ador also addressed accusations that its Vice President sold all his Hybe shares shortly before the audit was announced, stating that he had no prior knowledge of the audit plans and sold the shares to finance a real estate agreement.

source: https://n.news.naver.com/article/008/0005038271?sid=101 

ADDITIONAL CHAT LOG PUBLISHED 

16 Mar: between VP L and CEO Min. 

VP L: Hybe stock will crash when the Ador conflict becomes public"

CEO Min: naturally

3 Apr: Chat between VP L, S, CEO Min and Director K. “litigation will make the share price will go down and minority shareholders are gonna say

18 Apr: “The way to do this with no blood on your hands. FTC (complaint) ->leak to reporters -> stock price crashes -> minority shareholders sue”

https://hankyung.com/article/202405147594r