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Bang Si-hyuk. (Photo courtesy of HYBE) |
[Alpha Biz= Paul Lee] South Korea’s Financial Supervisory Service (FSS) has launched an investigation into Bang Si-hyuk, Chairman of HYBE, over allegations of fraudulent and deceptive trading practices in violation of the Capital Markets Act.
According to the FSS on May 28, Chairman Bang is suspected of deliberately concealing HYBE’s plans to go public in order to induce existing shareholders to sell their stakes to a private equity fund (PEF) reportedly established by one of his close associates.
Industry sources say that in 2019, prior to HYBE’s IPO, Bang informed early investors that there were no plans for a public listing. Fearing financial loss if the company did not go public, these investors sold their shares to the PEF. Bang is alleged to have had a profit-sharing agreement with the PEF, entitling him to approximately 30% of the capital gains following a successful IPO. The agreement also reportedly included a clause that Bang would personally repurchase the shares if the IPO failed to take place within a set timeframe.
HYBE went public in 2020, and Bang is believed to have received around KRW 400 billion (approximately USD 290 million) from the transaction. However, the securities registration statement submitted for the IPO did not disclose the agreement between Bang and the PEF.
The FSS is said to have secured evidence that HYBE began preparing for its IPO as early as 2019, including the appointment of a designated auditor—suggesting that internal preparations for a listing were underway while investors were being told otherwise.
Under Korea’s Capital Markets Act, if the amount of illegal profit or avoided loss exceeds KRW 5 billion, the individual responsible may face a minimum of five years imprisonment or life imprisonment.
AlphaBIZ Paul Lee(hoondork1977@alphabiz.co.kr)
