On Tuesday, July 22, the South Korean media outlet, Yonhap News, reported that three former HYBE employees were sentenced to prison following their first trial. This came after allegations were raised against the three employees for selling company stocks after learning about BTS' military enlistment announcement in advance.HYBE's stock prices plummeted by 24.78% after the announcement of the BTS members' military enlistment. In this regard, the three employees were accused of using insider and undisclosed information to avoid the losses they would have faced. As a result, the 13th Criminal Division of the Seoul Southern District Court declared three different sentences for the employees on charges of violating the Capital Markets Act.The first employee from Source Music, Kim, aged 37, was sentenced to 10 months in prison, suspended for two years, and also has to pay a fine of 231 million won. The second employee from Big Hit Music, Lee, aged 33, was sentenced to six months in prison, two years of suspension, and a fine of 51 million won.The third employee from Belif Lab, Kim, aged 42, was also sentenced to six months in prison and two years of suspension, but with a fine of 65 million won. Additionally, the court ordered the three employees to forfeit the equivalent amount they avoided losing by selling their HYBE stock based on undisclosed information.According to Yonhap News, here's what the court stated about their decision:"For entertainment companies, the activities of their artists have a significant impact on sales, so whether or not they suspend their activities is a sensitive issue. The crime in this case is a serious crime that undermines the public nature of the capital market, and is likely to be socially condemned."What is happening at HYBE Labels? All you need to know as Chairman Bang Si-hyuk under fire for unfair trading allegationsIn May 2025, according to The Korean Economic Daily, it was revealed that HYBE's Chairman, Bang Si-hyuk, was under investigation for alleged unfair trading practices. These allegations trace back to 2020, when BigHit Entertainment was rebranded into HYBE Labels. Before the IPO, the chairman reportedly clarified that the company doesn't have any intentions for a public listing to the investors.However, without informing the investors, Bang Si-hyuk had allegedly garnered profits amounting to 400 billion KRW through private equity funds after HYBE Labels officially went public. Given that these profits have not been officially filed under the company's listings, this violates the Capital Market Law. As a result, investigations into the matter are currently ongoing.While no official conclusions have been made about the case, Bang Si-hyuk could face a prison sentence of five years to life if these allegations are found to be true. This is because, according to the South Korean Law, any illegal profits or avoidance of losses crossing 5 billion KRW will be labeled as a violation of the Capital Market Law.So far, Bang Si-hyuk has not spoken to the public regarding the allegations and the ongoing investigations.