HYBE Chairman Bang Si-hyuk Under Investigation for Alleged IPO Misconduct

HYBE Chairman Bang Si-hyuk was questioned by police for nearly 14 hours over allegations of illicit gains amounting to approximately 190 billion KRW during the company's initial public offering (IPO).

On the morning of the 15th, Bang appeared at the Seoul Metropolitan Police Agency's Financial Crimes Investigation Unit as a suspect and left the premises at 11:48 PM. When asked by reporters about the alleged illicit gains and potential collusion with private equity funds, Bang remained silent and left in a black sedan after nearly 14 hours of questioning.

Upon his arrival, Bang briefly stated, "I apologize for causing concern. I will cooperate fully with the investigation." He refrained from commenting on the allegations of pre-IPO share sales, saying, "I will address this during the investigation."

The police are investigating claims that Bang misled existing investors, including venture capitalists, by stating there were no plans for an IPO, prompting them to sell their shares. It is alleged that he then acquired these shares through a special purpose company (SPC) funded by executives. Once HYBE proceeded with the IPO, the SPC sold the shares, and Bang reportedly received 30% of the profits, totaling around 190 billion KRW, through a secret agreement.

The Capital Markets Act prohibits providing false information or using fraudulent methods to gain profits in financial investment transactions. Violations resulting in profits over 5 billion KRW can lead to life imprisonment or a minimum of five years in prison.

Bang's representatives deny the allegations, asserting that all legal and regulatory requirements were met during the IPO. They also claim that existing investors profited significantly from the share sales and that Bang's gains were compensation for the risk associated with a put option.

The police will analyze Bang's statements to determine the next steps in the investigation. The probe began late last year following a tip-off, leading to raids on the Korea Exchange in June and HYBE's headquarters in July to gather evidence. The Financial Supervisory Service's special judicial police, under the direction of the Seoul Southern District Prosecutors' Office, are also investigating the case.

Choi Ji-ye, TenAsia Reporter wisdomart@tenasia.co.kr