Financial Supervisory Service to "Conduct Swift Investigation and Take Strict Action" on SM Market Manipulation Allegations

The Financial Supervisory Service (FSS) announced a swift investigation and strict response policy regarding the large-scale accumulation of SM Entertainment (SM) shares during the tender offer period.

[Image source=Yonhap News]

On the 1st, the FSS issued a press release stating, "If anyone artificially maintained the stock price above the tender offer price during the tender offer process, such actions could be punished as market manipulation under the Capital Markets Act," and "despite the financial authorities' determination to establish market order, we will promptly launch an investigation and respond strictly to acts that hinder fair price formation through large-scale stock accumulation during the tender offer period."

The FSS emphasized, "We will continue to closely monitor the series of processes related to management rights disputes of listed companies and strictly punish unfair trading practices that undermine the fairness of the capital market."

The FSS also sent a compliance urging message to those involved in the dispute over SM's management rights. The FSS said, "We urge the parties involved in the management rights dispute to compete fairly and to ensure that all procedures proceed lawfully," and added, "We ask investors to exercise caution in their investments so that reasonable investments can be made under the principle of self-responsibility."

Earlier, on the previous day, HYBE submitted a petition to the FSS requesting an investigation, stating, "On the 16th of last month, an abnormal purchase amounting to 2.9% (683,398 shares) of the total issued shares of SM occurred at the IBK Investment & Securities Pangyo branch," and claimed, "This is suspected of violating the Capital Markets Act." HYBE argued that this transaction took place while SM's stock price surged from the tender offer price of 120,000 KRW to 130,000 KRW, strongly suspecting it was intended to manipulate the market and obstruct HYBE's tender offer.

SM's stock price remained below 120,000 KRW from the tender offer announcement date on the 10th to the 14th of last month but soared to an all-time high of 133,600 KRW on the 16th. At that time, 15.8% of SM's total daily trading volume was purchased at the IBK Pangyo branch.

On the previous day, as the tender offer for SM shares closed, the stock price ended at 127,600 KRW, higher than the tender offer price.

This content was produced with the assistance of AI translation services.