HYBE founder and Chairman Bang Si-hyuk and three other executives at the company have been referred to prosecutors in an investigation of alleged “unfair trading” in connection with the company’s IPO.
South Korea’s Securities and Futures Commission (SFC) decided to forward a complaint against Bang and the three others, alleging violation of the Capital Markets Act, Yonhap News Agency and other local news outlers reported on Wednesday (July 16).
According to Korea Economic Daily, regulators suspect that Bang enriched himself unjustly by misleading HYBE investors, including venture capital firms, into believing that the company’s 2020 IPO would be delayed.
In reality, regulators say the IPO plans were proceeding apace, as evidenced by HYBE’s hiring of an auditor. But the investors’ belief there would be a delay reportedly spurred them to sell their shares to a special purpose company backed by HYBE executives.
This company sold its shares after the IPO, and Bang pocketed 30% of the profits, or around 190 billion won (USD $137 million at the current exchange rate), regulators say. That’s a somewhat lower figure than the 400 billion won that had been previously reported.
According to the Daily, private equity funds involved included STIC Investments, Estone Equity Partners, and New Main Equity.
The Daily describes a referral to prosecution as “the most severe regulatory action that can be taken against individuals for alleged violations of the Capital Markets Act,” but it doesn’t mean that Bang and his associates have been charged with any crimes.
Once a referral has been made, the prosecution service will open its own investigation, and will have the power to indict Bang or dismiss the charges, depending on the available evidence.
With news reports circulating in recent weeks about a possible referral to prosecution, HYBE issued a statement saying it would cooperate with the investigation, but believed Bang had done nothing wrong.
“We regret any concern caused by the recent reports related to our IPO process. HYBE is fully cooperating with the local authorities, including the financial regulators and the police, by submitting relevant materials and providing detailed explanations as part of the fact-finding efforts,” the company said in a statement to MBW last week.
“We will take the necessary time to thoroughly demonstrate that the IPO was carried out in full compliance with laws and regulations.”
“We will take the necessary time to thoroughly demonstrate that the IPO was carried out in full compliance with laws and regulations.”
HYBE
In a statement quoted by the Daily, HYBE said “the majority shareholder fully participated in the investigation and clearly explained that there was no attempt to seek private profit tied to the IPO. It is unfortunate that this explanation was not accepted, but we respect the regulator’s decision and will work to restore trust through the legal process.”
According to the Financial Services Commission, which oversees the SFC, Bang failed to appear before the commission to respond to the allegations, the Daily reported.
HYBE’s stock price closed the trading day Wednesday down 1.66%, at 266,500 won per share (approx. USD $192).Music Business Worldwide
