HYBE has pledged to cooperate fully with authorities as South Korean financial regulators reportedly prepare to refer the K-pop giant’s founder and Chairman Bang Si-hyuk to prosecutors over alleged securities fraud related to the company’s 2020 IPO.
That’s according to The Korea Herald and other local news outlets, which report that The Securities and Futures Commission’s capital market investigation team voted on Monday (July 7) to refer Chairman Bang to prosecutors, with the commission set to formally consider the recommendation at its July 16 meeting.
The Korea Times said referral to the prosecution is the most severe action that financial regulators in Korea can take against an individual suspected of violating the Capital Markets Act.
HYBE said in a statement issued to MBW: “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.”
“We will take the necessary time to thoroughly demonstrate that the IPO was carried out in full compliance with laws and regulations.”
On June 30, South Korean police raided Korea Exchange offices in Seoul as part of an expanding investigation into alleged securities violations related to the company’s IPO.
“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.”
HYBE
Citing Korean police, Korea JoongAng Daily reported at the time that the authorities collected evidence for their probe into potential capital markets law violations by Chairman Bang.
In late May, it was reported that the Financial Supervisory Service (FSS) intensified its probe into Chairman Bang regarding alleged arrangements with specific investors and private equity funds prior to the company’s 2020 IPO.
While this story was initially covered at the close of 2024, it gained renewed attention more than a month ago when the Korea Economic Daily published additional details.
The publication said the FSS was conducting “a fast-tracked investigation into [Chairman] Bang’s transactions with the PEFs and plans to refer the case to prosecutors for potential criminal prosecution.”
“We will take the necessary time to thoroughly demonstrate that the IPO was carried out in full compliance with laws and regulations.”
HYBE
Chairman Bang is reportedly alleged to have defrauded early investors and pocketed about 400 billion won (approx. $291 million) or 30% of the private equity fund’s investment returns after HYBE completed its listing in October 2020.
The FSS claims he misled investors in 2019 by saying the company had no plans to go public, prompting them to sell their shares to a private equity fund connected to him.
In late May, South Korean authorities raided HYBE’s headquarters as part of a separate investigation into alleged insider trading by a former executive.
That unnamed former exec, as reported by the Korea Times, allegedly made $176,500 by buying shares in rival K-pop company YG Entertainment’s subsidiary YG Plus, after learning that HYBE was planning to invest in the stock.
HYBE’s shares fell 1.6% to 277,000 won ($201) on Wednesday in Seoul, snapping two straight sessions of gains.
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