Bang Si-hyuk, chairman of HYBE (352820.KS), faces possible arrest over allegations that he reaped approximately 190 billion won ($140 million) in illicit gains by deceiving investors during the company's initial public offering (IPO) process.
The Seoul Metropolitan Police Agency's Financial Crimes Investigation Unit on Wednesday applied to the Seoul Southern District Prosecutors' Office for an arrest warrant for Bang on charges of fraudulent trading under the Capital Markets Act. Bang is accused of inducing investors in 2019 to sell their stakes to a specific private equity fund (PEF) by falsely telling them that the company had "no IPO plans."
The PEF sold large volumes of its shares after HYBE went public in 2022. Police believe Bang unlawfully pocketed 190 billion won, equivalent to 30% of the sale profits, under a non-disclosure agreement with the PEF. Investigators also determined that Bang was involved in the establishment and operation of the PEF, which was funded by HYBE executives. In disclosing the warrant application, police said, "We will continue to respond sternly to crimes that disrupt the capital market."
Police launched the investigation in late 2024 and conducted searches at the Korea Exchange (KRX) and HYBE in June and July last year. Since September, they have summoned Bang for questioning five times and imposed a travel ban, but the probe had shown little visible progress. After wrapping up questioning around December last year, police continued legal review. Some observers noted that a five-month-long legal review was unusual and criticized the investigation as "sluggish."
The arrest warrant application is viewed as being influenced by a recent request from the U.S. Embassy in Seoul to lift the travel ban. On the 19th of this month, the U.S. Embassy sent a letter to Yoo Jae-sung, acting commissioner general of the Korean National Police Agency, requesting that Bang, HYBE CEO Lee Jae-sang, and Vice President Kim Hyun-jung be permitted to visit the United States to attend events marking the 250th anniversary of American independence. Concerns were raised inside and outside the agency that lifting the travel ban could weaken the momentum of the investigation.
Meanwhile, HYBE shares closed at 249,000 won on Wednesday, down 2.35% from the previous day. Bang's legal counsel said, "It is regrettable that an arrest warrant has been sought despite our sincere cooperation with the investigation over a long period," adding, "We will faithfully engage in the legal proceedings ahead and do our best to present our case."
