South Korea’s Financial Supervisory Service (FSS) is currently investigating Bang Si Hyuk, the founder and chairman of HYBE, for alleged violations of the Capital Markets Act involving unfair and fraudulent trading practices.
According to reports from multiple financial and legal industry sources, the FSS has obtained evidence suggesting that, in the lead-up to HYBE’s initial public offering (IPO), Bang Si Hyuk misrepresented the company’s IPO plans to existing investors. These investors were allegedly informed that there were no intentions to list the company publicly, despite the company actively taking steps toward a public listing at that time.
In late 2019, HYBE reportedly applied for a designated auditor—a required step in the IPO process—while simultaneously indicating to some investors that a listing was not under consideration. Based on these communications, several early investors sold their shares to a private equity fund (PEF) founded by an associate of Bang Si Hyuk.
Subsequently, in 2020, Bang Si Hyuk is reported to have signed agreements with several investment firms, including STIC Investment, Easton Equity Partners, and New Main Equity. These agreements allegedly included a provision entitling him to receive approximately 30% of the profits from the post-IPO share transactions. It is estimated that Bang Si Hyuk received about 400 billion KRW (approximately $290 million) as a result. These financial arrangements were not disclosed in HYBE’s official IPO filings.
The FSS is reportedly evaluating whether these actions meet the legal threshold for fraudulent and unfair trading under Article 443 of the Capital Markets Act. If violations are confirmed and the illicit gains exceed 5 billion KRW, Bang Si Hyuk could face a minimum prison sentence of five years, or potentially life imprisonment.
Additionally, the Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency is conducting a parallel investigation into the matter.
When asked for comment, a spokesperson from HYBE stated that all transactions were carried out under legal guidance and within the framework of the law.
As of now, the FSS has not officially confirmed details of the investigation, stating that it does not disclose information regarding specific companies under review.
This case has drawn significant attention due to its potential implications for investor trust and transparency in Korea’s capital markets.