Photo credit: Bang Si-hyuk, Chairman of the Board of Directors of Hybe
South Korean financial authorities are filing criminal charges against Hybe Chairman Bang Si-hyuk for alleged fraudulent trading.
According to financial authorities on Wednesday, South Korea’s Capital Market Investigation Review Committee has decided to file a criminal complaint against Chairman Hybe Bang Si-hyuk. The charges, expected to be filed next week, come amid allegations of fraudulent trading under the Capital Market Act.
The committee, a deliberative body under the Securities and Futures Commission of the Financial Services Commission, is scheduled to hold a regular meeting on July 16 to process the agenda. “We saw the need to take a serious look at it, as Bang directly violated the Securities and Exchange Act,” said a financial authority official.
Industry sources reveal that prior to Hybe’s 2020 listing, Bang signed a contract with a private equity fund established by his acquaintance to share 30% of the profits from share sales. In doing so, he received approximately 400 billion won (US$290 million) in the post-listing settlement.
These private equity funds also purchased Hybe shares from existing investors and venture capital firms. Financial authorities reportedly obtained evidence that Bang’s side informed existing investors that a listing was currently impossible, but secretly pursued the listing through requests from designated auditors.
Financial authorities suspect Bang used private equity funds to circumvent the “lock-up” period, which prohibits major shareholders and executives from selling shares for a certain period of time after the listing.
“Even if it takes some time, we will faithfully explain that the current listing was carried out in accordance with laws and regulations,” said a hybe representative.
It’s important to note that the agreement between Bang and the private equity funds was omitted from the Korea Exchange’s listing review and the Securities and Exchange Commission’s securities registration statement filing process. This led to criticism that early investors who purchased Hybe shares without this information suffered losses.
