K-Pop Kingpin Bang Si-hyuk Faces Legal Trouble Over IPO Fraud Claims

Financial authorities on Wednesday referred Bang Si-hyuk, chairman and founder of K-pop powerhouse Hybe, to prosecutors over alleged fraudulent securities transactions related to the company’s listing, officials said.

The Securities and Futures Commission, operating under the Financial Services Commission, decided to forward a complaint against Bang and three former Hybe officials for their alleged violation of the Capital Markets Act regarding the company’s initial public offering.

Bang is accused of misleading investors, including venture capital firms, in 2019. He allegedly led them to believe that Hybe’s IPO would be delayed, inducing them to sell their shares to a special purpose company (SPC). This SPC was established by a private equity fund created and funded by Hybe executives.

While investors sold their shares to the SPC, financial authorities determined that Hybe was already in the process of preparing for its listing at that time.

Following the company’s public debut, the SPC sold its shares. Bang reportedly received 30 percent of the profit from the share sale, in line with a prior shareholder agreement.

“We intend to fully cooperate with the prosecution’s investigation to thoroughly examine the allegations surrounding this high-profile case,” the SFC stated. “Any violations uncovered will be rigorously investigated and strictly penalized.”

Hybe previously issued an apology for the allegations related to the IPO process, while maintaining that the listing was conducted in compliance with all relevant laws and regulations. (Yonhap)