The Financial Supervisory Service (FSS) is conducting a related investigation, suspecting that fraudulent transactions were carried out by Chairman BANG SI HYUK during HYBE’s initial public offering (IPO).
On May 28, Yonhap News reported that the FSS is investigating Chairman BANG SI HYUK over allegations of fraudulent transactions under the Capital Markets Act. It was reported that the Financial Services Commission (FSC) obtained evidence indicating that, during HYBE’s IPO process, the company proceeded with its public listing while misleading shareholders by stating that there were no plans for an IPO.
Chairman BANG SI HYUK was previously involved in a similar controversy late last year. According to the investment sector, he had signed an agreement between his shareholders and several private equity funds (PEFs)—including Stick Investment, Easton Equity Partners (Eston PE), and New Main Equity—prior to HYBE’s (formerly Big Hit) IPO in October 2020.
The terms of the agreement stated that if HYBE successfully went public within a set period, Chairman BANG SI HYUK would receive 30% of the profits from the PEFs’ stock sales. If the IPO failed, he would buy back his stake in the PEFs. HYBE did go public within the period, and BANG SI HYUK is said to have earned over 400 billion won (approximately €260 million or $280 million USD).
The issue is that this shareholder agreement was not disclosed during HYBE’s IPO process. At the time, HYBE and the underwriter firms were reportedly aware of the arrangement, but after reviewing domestic and international securities laws, it was determined that the transaction was not subject to disclosure requirements.
The case remains under investigation to determine the legality of the actions and whether sanctions will be imposed.
Journalist: Shawn
Translator: Shawn
Source: Yonhap News
