Tax authorities investigate Hybe for insider trading allegations.

Hybe, the well-known entertainment company responsible for the global K-pop sensation BTS, is currently under scrutiny by the National Tax Service in South Korea, following a recent police raid related to allegations of misconduct in the capital market by the company’s chairman, Bang Si-hyuk. Reports indicate that tax officials from the NTS visited Hybe’s headquarters in Seoul to obtain documents and financial records as part of the investigation. The probe is being overseen by the NTS’ 4th Bureau of Investigation at the Seoul Regional Tax Office, a division specialized in conducting special audits and investigations into irregularities.

In a briefing earlier this week, the NTS disclosed that they have initiated tax probes into 27 individuals and entities suspected of engaging in stock market manipulation and tax evasion, with Hybe being one of the targets. The total estimated amount involved in these alleged tax evasion activities is said to be around 1 trillion won ($718.7 million). The agency emphasized the impact of unfair practices in the stock market on both domestic and international investors, leading to a loss of confidence in South Korea’s financial system and contributing to the nation’s slowed economic growth. The NTS stated their commitment to thoroughly investigating tax evasion linked to disruptions in the capital market.

This investigation marks the first time Hybe has undergone a tax audit since 2022, when the Seoul tax office conducted a routine investigation that resulted in a substantial penalty imposed on the company. The current probe comes shortly after a police raid on Hybe as part of a separate investigation involving Chairman Bang. Authorities are looking into claims that Bang misled investors in 2019 by stating that the company had no intentions of an initial public offering, only to proceed with one later on. It is suspected that Bang encouraged these investors to sell their shares to a private equity fund that he had personal ties with. According to financial regulators in South Korea, Bang allegedly received 30 percent of the fund’s profit from the resale following the IPO, amounting to approximately 190 billion won.

Hybe has refrained from making any public statements regarding either investigation, maintaining a discreet stance amidst the ongoing legal proceedings. The entertainment company, known for its successful management of BTS and other K-pop acts, continues to face challenges and controversies as it navigates through these legal issues. The outcome of the investigations launched by the NTS and the police raid will shed light on the alleged misconduct and implications for Hybe and its leadership.