SEOUL, SOUTH KOREA - OCTOBER 29: Daesung of South Korean boy band Bigbang attends "Commitment" VIP ... [+]
The stock price of K-pop company YG Entertainment closed at major low this week amid yet another star under its roster coming under scrutiny for illicit business dealings. On Monday (July 29), YG's stock price closed on the KOSDAQ at 24,350 South Korean Won (KRW), or around $20.60 USD at current exchange rates. It is an apparent all-time low close for the South Korean entertainment company, and further fell to open at 24,300 KRW on Tuesday (July 30). YG closed that day with gains at 25,500 KRW, or $21.75, and has vacillated in the 24-25,000 price range since.
The occurrence came both at a time of volatility in the South Korean stock market, and amid allegations of wrongdoing surrounding BIGBANG’s Daesung (Kang Dae-sung). According to reports, the 30-year-old K-pop star was recently revealed as the owner of a building that hosted several questionable businesses, such as illegal adult entertainment bars.
Daesung is the latest in a string of YG Entertainment-associated persons to come under scrutiny for alleged illegal actions in recent months.
The building owned by the BIGBANG member came under investigation by the Seoul Gangnam Police Station in recent months, and a case involving four tenants of the building were sent to prosecution last month for violating facilities regulations, reports The Korea Herald. They allegedly offered hostess services to clientele and were run as drinking establishments, even though they were registered as restaurants. The police are looking into whether Daesung aided or abetted the unlawful practices.
On July 26, Daesung issued a statement through YG in which he said he lacked knowledge of the situation, saying that he had bought the building prior to enlisting in South Korea’s mandatory military service last year, and was unaware of the businesses being conducted by tenants prior to his purchasing of it; he will complete his service and return to civilian life in November. On July 30, Channel A reported that it acquired an alleged copy of the contract between Daesung and a tenant, which sources said included intentional phrasing that emphasized that any illegal dealings involved would result in a contract termination, suggesting the vocalist had been aware of the businesses’ under-the-table practices despite his earlier denial otherwise.
The allegations surrounding Daesung come after a series of high-profile legal cases revolving around the South Korean entertainment world earlier this year, known collectively as “Burning Sun” due to the name of one of the primary establishments under scrutiny. The intertwined cases stem out of the clubbing and entertainment scenes in Seoul, and have prominently revolved around several high-profile male South Korean entertainers, including Daesung’s fellow BIGBANG member Seungri (Lee Seung-hyun) and YG founder Yang Hyun-suk, due to their alleged involvement in a wide range of illegal activities including embezzlement, sexual assault, illegally filming sexual partners, and coordinating prostitution. Law enforcement officers and politicians have also been involved in relation to several bribery and corruption charges. Stock prices for all of Korea’s “Big 3” K-pop agencies – SM, JYP and YG Entertainments – have fluctuated throughout the year in correlation with the cases.
YG Entertainment was founded in 1996 by Yang, and has been behind the formation of popular K-pop acts including BIGBANG, 2NE1 and BLACKPINK. It has also managed the likes of Epik High and Psy. The company, which has a variety of businesses along with managing musical artists, incorporated in 2011.
The dip this week follows last month’s fall after Yang announced that he will distance himself from the brand, though he is still the primary shareholder; he has since been booked on suspicion of coordinating prostitution in return for business favors. His brother Yang Min-suk – who recently stepped down as CEO and has since been replaced by Hwang Bo-kyung, a former executive director and CFO at YG – is the next largest individual shareholder, while companies such as Naver and Tencent also hold sizable amounts of stock.
After the drop on Monday, YG’s stock rebounded the following day. It matched an overall bouncing back from within the entire South Korean stock world – SM and JYP included –, which has wavered recently in part due to rising tensions between Japan and South Korea that endanger the financial relationship between the two countries.
YG is reportedly preparing to return 67 billion KRW ($56.9 million) to fashion brand Louis Vuitton Moet Hennessy (LVMH), which is expected to cash out of the business in October, five years since LVMH first entered a deal with YG.
The entertainment company's shares opened at 24,800 and closed at 25,250 KRW on Wednesday (July 31).
Neither YG nor LVMH responded to requests to comment on this story.
