Financial authorities have filed a criminal complaint with prosecutors against Bang Si-hyuk, chairman of HYBE, on charges of fraudulent unfair trading under the Capital Markets Act. This is the most severe sanction that can be imposed on an individual suspected of violating financial laws such as the Capital Markets Act.
The Securities and Futures Commission (SFC), under the Financial Services Commission, announced on July 16 that it had decided at a regular meeting to file and notify a complaint with the prosecution against Chairman Bang and former HYBE executive A, among others, for violating the prohibition on unfair trading under the Capital Markets Act.
According to the SFC, prior to HYBE's listing in 2019, Chairman Bang allegedly deceived existing investors by making it appear that the company's initial public offering (IPO) would be delayed. Afterward, HYBE executives established and funded a private equity fund (PEF), which then created a special purpose company (SPC) that purchased shares held by Chairman Bang.
In addition, despite entering into a shareholders' agreement stipulating that 30% of the capital gains from the sale of SPC-held shares would be paid to Chairman Bang, he concealed the existence of this agreement and the relationships between HYBE executives and the SPC during the 2020 listing process.
The financial authorities stated, "After the company went public, the SPC sold its shares, and in accordance with the shareholders' agreement, the largest shareholder acquired 30% of the capital gains from the sale. Former executives, among others, are suspected of engaging in unfair trading by using their status as limited partners of the private equity fund's general partner (GP) to obtain substantial unjust profits under the pretense of performance fees."
The authorities added, "We plan to actively cooperate with the prosecution's investigation so that all suspicions related to this case, which has drawn significant public attention, can be thoroughly clarified. Any detected violations of the law will be rigorously investigated and dealt with sternly in order to ensure the integrity of capital market transactions."
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