The financial watchdog will report Bang Si-hyuk, founder and chairman of K-pop powerhouse HYBE, for lying to shareholders so that they would sell their shares to a private fund run by Bang's acquaintance, a report said Wednesday.
According to a report by The Korea Economic Daily, the Financial Supervisory Service (FSS) has gathered evidence that Bang lied to HYBE shareholders in 2019 before the company went public on the Korea Exchange.
He allegedly told shareholders that he had no intention of taking the company public and provided them with false information to persuade them to sell their shares to a private equity fund (PEF) founded by one of his acquaintances.
Bang was even promised 30 percent of the investment profit from the PEF, which paid him 400 billion won ($291 million), according to the report.
If found true, Bang's actions would constitute fraudulent activity under the Financial Investment Services and Capital Markets Act.
The FSS has gathered “multiple documents” that Bang and HYBE proceeded with plans to take the company public while simultaneously assuring early investors that there were no such plans, according to the report.
The FSS is closely scrutinizing activity from late 2019. Existing shareholders had sent an email urging Bang and HYBE to take the company public, to which the company replied in September and October 2019 that it was “impossible under current circumstances.”
HYBE signed with Ernst & Young as the underwriter in November 2019. The company listed on the Korea Exchange stock market in October 2020.
“All transactions took place within the boundaries of law, after they were overseen by legal experts,” HYBE said.
The FSS plans to fast-track the case to prosecutors once its investigation concludes, according to the report.
Article 443 of the Capital Markets Act stipulates that a fraudulent financial act that has resulted in more than 5 billion won in profit can lead to a prison sentence of five years to life.
Source: https://koreajoongangdaily.joins.co...O-to-prosecution-on-fraud-allegations/2318002
HYBE chairman Bang Si Hyuk under criminal investigation for alleged fraudulent securities deal worth 400 billion KRW (approximately $290 million)
On May 28th, South Korea’s Financial Supervisory Service (FSS) is preparing to request a formal criminal investigation into HYBE chairman Bang Si Hyuk over allegations of fraudulent securities transactions. The case involves a controversial 400 billion KRW (approximately $290 million) deal that could potentially lead to life imprisonment under the Capital Markets Act.
According to industry sources, the FSS’s Investigation Department 2 has obtained evidence suggesting that in 2019, Bang Si Hyuk misled existing HYBE investors by stating there were no plans for an Initial Public Offering (IPO). Based on this information, investors sold their shares to a private equity fund (PEF) established by an associate of Bang Si Hyuk. At the same time, HYBE was reportedly taking active steps toward an IPO, including applying for a designated auditor, a necessary procedure for public listing.
The FSS has determined that these actions likely constitute fraudulent unfair trading under the Capital Markets Act. Bang Si Hyuk reportedly entered a profit-sharing agreement with the PEF, receiving approximately 30 percent of the investment returns and eventually securing around 400 billion KRW (approximately $290 million). These shareholder agreements were not disclosed in HYBE’s official IPO filings.
The FSS plans to conclude its investigation soon and notify prosecutors through a fast-track process. In addition, the Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency is conducting a separate investigation into the case.
A HYBE spokesperson stated that all transactions were reviewed by legal counsel and carried out within the boundaries of the law.
The investigation has accelerated six months after initial media reports raised questions about potential misconduct surrounding HYBE’s IPO. Initially treated as a disclosure violation, the probe was later reassigned to a different FSS division and is now focusing on unfair trading practices.
Sources in the investment banking sector report that the FSS has secured multiple pieces of evidence showing that Bang Si Hyuk and HYBE misled existing investors while actively moving forward with IPO preparations. In November 2019, HYBE contracted EY Hanyoung as a designated auditor, which required submission of documents that confirmed IPO intentions, contradicting earlier claims to investors.
In 2020, prior to HYBE’s IPO (then operating as BigHit Entertainment), Bang Si Hyuk signed agreements with STIC Investment, Easton Equity Partners (Easton PE), and New Main Equity. These contracts entitled Bang Si Hyuk to receive about 30 percent of profits from post-IPO share sales and included buy-back clauses in case of IPO failure.
If violations are confirmed, Bang Si Hyuk could face severe penalties under Article 443 of the Capital Markets Act. The law imposes life imprisonment or a minimum of five years in prison if the illicit gains exceed 5 billion KRW (approximately $290 million). Authorities are closely monitoring the implications of the case. If undisclosed profit-sharing deals between major shareholders and PEFs are tolerated, investor confidence in the capital markets could be seriously undermined.
A financial industry expert noted that the HYBE case appears to be a typical example of fraudulent dealings tied to IPO processes. The expert warned that without a strong regulatory response, similar cases may become more frequent. STIC Investment, Easton PE, and New Main Equity acquired significant shares in HYBE between 2018 and 2019, buying from early investors such as LB Investment and AlpenRoute Asset Management. Prior to these acquisitions, existing investors reportedly urged HYBE to move forward with IPO preparations, but were told by Bang Si Hyuk and HYBE executives that listing was not feasible at that time.
Investigators have since obtained evidence that HYBE was actively preparing for its IPO, including internal meetings and official filings with auditors, suggesting deliberate misrepresentation to existing shareholders. As both financial and legal investigations progress, the outcome of this case could set a critical precedent in Korea’s approach to transparency and accountability in public markets.
Source: https://www.allkpop.com/article/202...rth-400-billion-krw-approximately-290-million
According to a report by The Korea Economic Daily, the Financial Supervisory Service (FSS) has gathered evidence that Bang lied to HYBE shareholders in 2019 before the company went public on the Korea Exchange.
He allegedly told shareholders that he had no intention of taking the company public and provided them with false information to persuade them to sell their shares to a private equity fund (PEF) founded by one of his acquaintances.
Bang was even promised 30 percent of the investment profit from the PEF, which paid him 400 billion won ($291 million), according to the report.
If found true, Bang's actions would constitute fraudulent activity under the Financial Investment Services and Capital Markets Act.
The FSS has gathered “multiple documents” that Bang and HYBE proceeded with plans to take the company public while simultaneously assuring early investors that there were no such plans, according to the report.
The FSS is closely scrutinizing activity from late 2019. Existing shareholders had sent an email urging Bang and HYBE to take the company public, to which the company replied in September and October 2019 that it was “impossible under current circumstances.”
HYBE signed with Ernst & Young as the underwriter in November 2019. The company listed on the Korea Exchange stock market in October 2020.
“All transactions took place within the boundaries of law, after they were overseen by legal experts,” HYBE said.
The FSS plans to fast-track the case to prosecutors once its investigation concludes, according to the report.
Article 443 of the Capital Markets Act stipulates that a fraudulent financial act that has resulted in more than 5 billion won in profit can lead to a prison sentence of five years to life.
Source: https://koreajoongangdaily.joins.co...O-to-prosecution-on-fraud-allegations/2318002
HYBE chairman Bang Si Hyuk under criminal investigation for alleged fraudulent securities deal worth 400 billion KRW (approximately $290 million)
On May 28th, South Korea’s Financial Supervisory Service (FSS) is preparing to request a formal criminal investigation into HYBE chairman Bang Si Hyuk over allegations of fraudulent securities transactions. The case involves a controversial 400 billion KRW (approximately $290 million) deal that could potentially lead to life imprisonment under the Capital Markets Act.
According to industry sources, the FSS’s Investigation Department 2 has obtained evidence suggesting that in 2019, Bang Si Hyuk misled existing HYBE investors by stating there were no plans for an Initial Public Offering (IPO). Based on this information, investors sold their shares to a private equity fund (PEF) established by an associate of Bang Si Hyuk. At the same time, HYBE was reportedly taking active steps toward an IPO, including applying for a designated auditor, a necessary procedure for public listing.
The FSS has determined that these actions likely constitute fraudulent unfair trading under the Capital Markets Act. Bang Si Hyuk reportedly entered a profit-sharing agreement with the PEF, receiving approximately 30 percent of the investment returns and eventually securing around 400 billion KRW (approximately $290 million). These shareholder agreements were not disclosed in HYBE’s official IPO filings.
The FSS plans to conclude its investigation soon and notify prosecutors through a fast-track process. In addition, the Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency is conducting a separate investigation into the case.
A HYBE spokesperson stated that all transactions were reviewed by legal counsel and carried out within the boundaries of the law.
The investigation has accelerated six months after initial media reports raised questions about potential misconduct surrounding HYBE’s IPO. Initially treated as a disclosure violation, the probe was later reassigned to a different FSS division and is now focusing on unfair trading practices.
Sources in the investment banking sector report that the FSS has secured multiple pieces of evidence showing that Bang Si Hyuk and HYBE misled existing investors while actively moving forward with IPO preparations. In November 2019, HYBE contracted EY Hanyoung as a designated auditor, which required submission of documents that confirmed IPO intentions, contradicting earlier claims to investors.
In 2020, prior to HYBE’s IPO (then operating as BigHit Entertainment), Bang Si Hyuk signed agreements with STIC Investment, Easton Equity Partners (Easton PE), and New Main Equity. These contracts entitled Bang Si Hyuk to receive about 30 percent of profits from post-IPO share sales and included buy-back clauses in case of IPO failure.
If violations are confirmed, Bang Si Hyuk could face severe penalties under Article 443 of the Capital Markets Act. The law imposes life imprisonment or a minimum of five years in prison if the illicit gains exceed 5 billion KRW (approximately $290 million). Authorities are closely monitoring the implications of the case. If undisclosed profit-sharing deals between major shareholders and PEFs are tolerated, investor confidence in the capital markets could be seriously undermined.
A financial industry expert noted that the HYBE case appears to be a typical example of fraudulent dealings tied to IPO processes. The expert warned that without a strong regulatory response, similar cases may become more frequent. STIC Investment, Easton PE, and New Main Equity acquired significant shares in HYBE between 2018 and 2019, buying from early investors such as LB Investment and AlpenRoute Asset Management. Prior to these acquisitions, existing investors reportedly urged HYBE to move forward with IPO preparations, but were told by Bang Si Hyuk and HYBE executives that listing was not feasible at that time.
Investigators have since obtained evidence that HYBE was actively preparing for its IPO, including internal meetings and official filings with auditors, suggesting deliberate misrepresentation to existing shareholders. As both financial and legal investigations progress, the outcome of this case could set a critical precedent in Korea’s approach to transparency and accountability in public markets.
Source: https://www.allkpop.com/article/202...rth-400-billion-krw-approximately-290-million
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