Bang Si Hyuk investigated for suspected IPO fraud, HYBE raided for another issue

HYBE, the parent company of K-pop sensation BTS, is embroiled in a financial scandal that has the authorities on high alert. The founder and chairman of HYBE, Bang Si Hyuk, is under investigation for allegedly deceiving investors during the company’s initial public offering (IPO) process. Sources reveal that Bang is suspected of defrauding investors of approximately $289 million by falsely claiming that HYBE had no plans to go public in 2019, prompting them to sell shares to a private equity fund connected to him.

The suspicious part is that Bang had a profit-sharing deal with the fund, entitling him to a significant portion of the investment gains, which were allegedly concealed from the IPO disclosures. This lack of transparency has triggered concerns about the fairness of the transaction. These allegations point towards potential securities fraud, rather than just regular insider trading.

The Financial Supervisory Service (FSS) is exploring whether these actions constitute fraudulent and unfair trading practices that could disrupt the order of the capital market. If convicted, Bang could face severe legal repercussions including a minimum of five years in prison, up to a life sentence for offenses exceeding 5 billion won. The police have even applied for a search and seizure warrant, further escalating the situation.

In the midst of Bang Si Hyuk’s legal woes, HYBE is facing another scandal involving an executive suspected of insider trading. This separate investigation centers around an unnamed HYBE employee who allegedly made illicit profits through stock trading using confidential information about HYBE. The employee in question, reportedly a former CFO, is believed to have gained 240 million won through investments in YG Plus, a subsidiary of rival company YG Entertainment, based on foreknowledge of HYBE’s investment plans.

In response to the probe, HYBE confirmed the investigation but clarified that the individual involved was a former employee. The company has cooperated with authorities in executing the search warrant, shedding light on the issue while maintaining transparency. The individual’s identity, although undisclosed officially, is suspected to be Lee Kyung Joon, who held senior positions within HYBE until recently.

These ongoing investigations have cast a shadow over HYBE and raised questions about the company’s financial practices. As legal proceedings unfold, the K-pop powerhouse must navigate through these turbulent times and address any potential wrongdoing to restore trust and integrity within the industry.