Financial Authorities to Refer Bang Sihyuk to Prosecution... HYBE Vows to Fully Clarify Listing Compliance

Indications of Profiting After Deceiving About IPO Plans
Prosecution Referral Expected on Charges of Fraudulent and Unfair Trading
HYBE: "Listing Process Conducted in Compliance with Laws and Regulations"
"Cooperating with Financial Authorities and Police to Verify the Facts"

HYBE has issued a statement regarding the decision by financial authorities to refer Bang Sihyuk, Chairman of HYBE, to the prosecution on charges of fraudulent and unfair trading under the Capital Markets Act.

Bang Sihyuk, Chairman of HYBE. Photo by Dongju Yoon doso7@

On July 9, HYBE stated, "We 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 in verifying the facts by providing detailed explanations and submitting relevant materials."

The company continued, "Even if it takes some time, we will thoroughly clarify that the listing at the time was conducted in compliance with laws and regulations."

According to financial authorities on this day, the Capital Market Investigation and Deliberation Committee, a deliberative body of the Securities and Futures Commission, held a meeting on July 7 and decided to refer Chairman Bang to the prosecution, passing its opinion to the Securities and Futures Commission. The Securities and Futures Commission is scheduled to discuss the matter at its regular meeting on July 16. Referral to the prosecution is the highest level of sanction imposed on individuals suspected of unfair trading.

Chairman Bang is suspected of deceiving existing investors prior to HYBE's 2020 listing by stating there were no plans for an initial public offering (IPO), and then arranging for them to sell their shares to a private equity fund (PEF) established by an acquaintance. It is alleged that Chairman Bang contracted to receive more than 30% of the capital gains from the sale of shares to the PEF and received approximately 400 billion won after the listing. The details of this contract were not disclosed in the securities registration statement.

Financial authorities determined that, as a result, early investors who purchased HYBE shares suffered losses. They also believe that Chairman Bang used the private equity fund to circumvent the lock-up period, which restricts major shareholders and executives from selling shares for a certain period after a company goes public.