South Korea’s monetary watchdog has determined to refer Bang Si-hyuk, chairman and founding father of Ok-pop powerhouse HYBE, to prosecutors over allegations that he misled buyers forward of the corporate’s preliminary public providing (IPO). This marks probably the most critical degree of enforcement underneath the nation’s Capital Markets Act.
Based on Korean media experiences and monetary authorities, the Capital Market Investigation Deliberation Committee — a part of the Monetary Providers Fee (FSC) — held a gathering on Monday, July 7, and concluded that Bang and a number of other others ought to face legal prices. The advice has been handed to the FSC’s Securities and Futures Fee and is scheduled for overview at its upcoming assembly on July 16.
On the middle of the case is a controversial collection of personal fairness transactions made in 2019, simply earlier than HYBE — then often known as Large Hit Leisure — started its IPO course of. Bang is accused of falsely assuring early buyers that the corporate had no plans to go public, persuading them to promote their shares to a non-public fairness fund allegedly managed by one in all his associates.
In actuality, HYBE had already initiated the IPO course of, together with deciding on a chosen auditor—an early and necessary step in a Korean public providing. Regardless of this, buyers offered their shares based mostly on Bang’s assurances. HYBE later debuted on the Korea Alternate in October 2020, with its IPO priced at 135,000 received per share (roughly $115 on the time). The inventory worth surged to as excessive as 420,000 received shortly after itemizing.
Authorities allege that Bang finally gained about 400 billion received (roughly $291 million) via the undisclosed deal, reportedly receiving a 30% stake within the income from the personal fund. Critics argue that the association allowed him to bypass “lock-up” interval guidelines—laws that forestall main shareholders from promoting shares shortly after an IPO.
Crucially, the transaction was by no means disclosed in HYBE’s official securities filings, doubtlessly violating disclosure necessities underneath Korea’s Capital Markets Act. Below the regulation, monetary crimes involving illicit beneficial properties exceeding 5 billion received (round $3.6 million) may end up in a life sentence or a minimal of 5 years in jail.
HYBE has denied any wrongdoing, stating that “all transactions had been carried out legally after cautious authorized overview.” Bang appeared earlier than monetary regulators final month to handle the allegations. The corporate has pledged full cooperation with each monetary authorities and ongoing police investigations.
In the meantime, the Seoul Metropolitan Police have launched a parallel investigation. On June 30, police raided the Korea Alternate places of work as a part of their probe into potential irregularities in HYBE’s IPO course of.