HYBE Responds to Bang Sihyuk’s Fraud Allegations: "We Complied with Laws and Regulations"

"Actively Cooperating to Verify the Facts, Including Submission of Relevant Materials"

Bang Sihyuk, chairman of HYBE, is seated at the 64th regular general meeting of the Federation of Korean Economic Organizations held in February at the FKI Tower Conference Center in Yeongdeungpo-gu, Seoul. Photo by Yonhap News

HYBE has stated that it intends to clarify its position regarding the planned criminal complaint against Chairman Bang Sihyuk for alleged fraudulent and unfair trading under the Capital Markets Act.

On July 9, HYBE released a statement saying, "We sincerely apologize for causing concern due to news related to our listing process," and added, "Regarding the current issues being raised, we are actively cooperating with the financial authorities and the police by providing detailed explanations and submitting relevant materials to help establish the facts." The company further stated, "Even if it takes some time, we will thoroughly clarify that the listing at the time was conducted in compliance with all relevant laws and regulations."

Previously, Yonhap News reported that the Capital Markets Investigation and Deliberation Committee under the Securities and Futures Commission, which is part of the Financial Services Commission, recently held a meeting and decided to file a criminal complaint with the prosecution against Chairman Bang for alleged fraudulent and unfair trading under the Capital Markets Act. The agenda item is scheduled to be finalized at the regular meeting of the Securities and Futures Commission on July 16.

The financial authorities believe that, ahead of HYBE's listing in 2020, Chairman Bang entered into an agreement with a private equity fund (PEF) established by an acquaintance to share profits from the sale of shares, and received approximately 400 billion won after the listing. This contract was not disclosed during the Korea Exchange's listing review or in the securities registration statement submitted to the Financial Supervisory Service, and the authorities believe that early investors who were unaware of this suffered losses.

Additionally, there are suspicions that Chairman Bang used the private equity fund to circumvent lock-up regulations, which prevent major shareholders and executives from selling shares for a certain period after listing. Authorities have reportedly identified circumstances in which Chairman Bang's side told existing investors that listing would be difficult, while simultaneously pursuing the listing behind the scenes by, for example, applying for a designated auditor.