Criminal Probe on the Horizon for HYBE Chairman Bang Si Hyuk Amid Fraud Allegations
South Korea’s Financial Supervisory Service (FSS) is gearing up to request a criminal investigation into Bang Si Hyuk, the founder and chairman of HYBE. The scrutiny centers on serious allegations that Bang may have been involved in fraudulent activities during HYBE’s initial public offering (IPO) process.
The FSS has gathered evidence indicating that back in 2019, Bang allegedly misled early investors by asserting that HYBE had no intentions of going public. This claim purportedly influenced these investors to sell their shares to a private equity fund (PEF) associated with one of Bang’s close associates. However, HYBE had reportedly already embarked on IPO procedures, including applying for a designated auditor—an essential step for listing on the stock market.
Adding another layer to the controversy, it’s been revealed that Bang held a profit-sharing agreement with the PEF, which entitled him to approximately 30% of the investment profits. Reports suggest this arrangement could have netted him around ₩400 billion KRW (about $291 million USD). Alarmingly, this contract was never disclosed in the company’s IPO filings, raising significant concerns regarding transparency and ethical conduct.
Categorizing the matter as “fraudulent unfair trading” under Korea’s Capital Markets Act, the FSS aims to expedite the case to prosecutors. Concurrently, the Financial Crimes Division of the Seoul Metropolitan Police Agency is conducting a separate investigation into these allegations.
In the wake of these developments, HYBE has defended its actions, stating that all transactions adhered to legal guidelines and were subject to rigorous reviews.
This latest information emerges six months after initial reports surfaced about suspicious dealings involving HYBE and private equity firms. Initially, the FSS began its inquiries with a focus on potential disclosure violations, but the scope has intensified to encompass more severe fraud accusations.
Should these allegations prove accurate, Bang—along with others implicated—could face grave legal repercussions. Under the law, fraudulent profits exceeding ₩5 billion KRW (approximately $3.63 million USD) come with severe penalties, potentially including life imprisonment or a minimum of five years behind bars.
As authorities navigate this high-stakes investigation, the pressure mounts to establish a firm precedent, particularly as the financial community grows increasingly wary of how similar behind-the-scenes deals could undermine trust in South Korea’s financial markets.
