HYBE Chairman Bang Si-hyuk Faces Fraud Allegations in Capital Market Law Violation

Bang Si-hyuk, the chairman of HYBE, has been accused of fraudulent transactions under the Capital Market Act and has been reported to the prosecution.

On the 16th, the Securities and Futures Commission (SFC) of the Financial Services Commission announced during a regular meeting that they have reported and notified the prosecution of Bang, the largest shareholder of HYBE, and a former HYBE executive, identified as A, for alleged violations of the Capital Market Act.

A prosecution report is the highest level of sanction that financial authorities can impose on individuals suspected of violating the Capital Market Act. According to the Act, if the profit from the violation exceeds 5 billion KRW (approximately 3.8 million USD), the individual can face life imprisonment or a minimum of five years in prison.

According to the SFC, Bang is accused of misleading existing shareholders in 2019 by suggesting that HYBE's initial public offering (IPO) would be delayed. This allegedly led venture capitalists and other existing investors to sell their HYBE shares to a special purpose company (SPC) established by a private equity fund (PEF) created by HYBE executives.

Investors, based on Bang's statements, sold their shares to the SPC. However, financial authorities determined that HYBE was actively proceeding with IPO-related processes, such as applying for a designated audit, during this period.

After HYBE's IPO, the PEF sold its shares, and Bang reportedly received approximately 190 billion KRW (around 144 million USD) as 30% of the SPC's sale profit, as per a pre-existing shareholder agreement.

Reported by Ji-won Kim, TenAsia one@tenasia.co.kr