Police have launched an investigation into HYBE chairman Bang Si Hyuk over allegations of fraudulent and unfair trading.
On July 24, the Seoul Metropolitan Police Agency’s Financial Crimes Investigation Unit conducted a search and seizure at HYBE’s headquarters in Yongsan-gu, Seoul.
Chairman Bang Si Hyuk is under investigation for allegedly deceiving investors in 2019 by stating there were no plans for HYBE to go public. Based on this claim, several investors sold their shares, unaware that an IPO was actually being prepared. He then allegedly proceeded with the IPO and profited by hundreds of billions of won.
He is also suspected of encouraging those investors to sell their shares to a special purpose company connected to a private equity fund. Notably, two of the fund’s registered executives were former HYBE employees and are known to be close to Bang Si Hyuk.
The chairman is also accused of signing a profit-sharing agreement with the SPC to receive about 30% of the gains from the stock sales but failed to disclose this arrangement in HYBE’s official filings. The reported profit he received from the private equity deal amounts to approximately 400 billion won ($292 million).
The Financial Services Commission previously referred Bang and related executives to the prosecution on July 16. They cited violation of the Capital Market Act, particularly the ban on unfair trading practices. Authorities believe they have gathered enough evidence to support the allegations.
Amid growing public scrutiny, HYBE responded that it is regrettable that the chairman’s explanations were not accepted during earlier investigations. The company added
We respect the decision of the financial authorities and will do our best to actively clarify the related suspicions during future investigations in order to restore the trust of the market and our stakeholders.
Legal proceedings and further actions by financial authorities are expected in the coming weeks.
Adding to the pressure, President Lee Jae Myung’s recent push for stronger financial transparency is seen as supporting the ongoing investigation. Under his newly announced “one-strike-out” policy, individuals found guilty of unfair stock trading will face permanent expulsion from the market and severe penalties.
