Hybe Chairman Bang Si Hyuk Facing Prosecution for Market Manipulation

Korea’s financial regulators are cracking down on Bang Si Hyuk, HYBE’s chairman, over allegations of market manipulation. This crackdown is part of President Lee Jae Myung’s efforts to eliminate unfair trading practices in the capital market. Bang is facing a criminal complaint from the Financial Services Commission (FSC) for fraudulent transactions that violate the Capital Markets Act.

The Capital Markets Investigation and Deliberation Committee, an advisory body under the Securities and Futures Commission (SFC), recently recommended that Bang and three former HYBE executives be prosecuted. The final decision is expected during a meeting on July 16.

President Lee Jae Myung has been vocal about restoring fairness and transparency in Korea’s financial markets. He emphasized the importance of establishing trust through a fair and transparent order to revitalize the capital market. The president warned of a “one-strike-out” policy for those caught manipulating stock prices, emphasizing strict punishment for any misuse of undisclosed information.

In response to the president’s directives, financial regulators are initiating swift actions. The FSC, in collaboration with the Financial Supervisory Service (FSS) and the Korea Exchange, announced a joint plan to eradicate unfair trading practices. A 34-member task force will be set up to combat market manipulation, insider trading, and the dissemination of false information through social media or fake news.

The fragmented oversight and inconsistent authority across institutions have hindered regulatory efforts in the past. The new task force aims to address these challenges by establishing specialized units for forced investigation, general investigation, and rapid review.

The “one-strike-out” rule is planned to encompass unfair trading, illegal short selling, and false disclosures. While the legal framework for enforcement is in place, detailed criteria are being finalized to ensure effective application of the rule. The task force is expected to handle the first cases applying this rule soon.

Bang underwent questioning over allegations that he misled early investors about HYBE’s IPO plans while arranging for them to sell shares to a private equity fund. It’s reported that Bang received a substantial sum from this deal, hidden from public disclosure. The Seoul Metropolitan Police Agency’s financial crimes unit is conducting its investigation, although search warrants related to the case have been denied twice by prosecutors.

HYBE has assured full cooperation with authorities, submitting explanations and relevant documents to demonstrate compliance with applicable laws and regulations during its IPO. The company is committed to proving the legitimacy of its actions in the face of the ongoing investigation.