HYBE’s founder and chairman Bang Si Hyuk is under serious legal scrutiny over allegations of capital markets fraud connected to the company’s 2020 IPO.
On July 9th KST, South Korean financial authorities confirmed that the Capital Market Investigation Deliberation Committee (CMIDC) has reviewed Bang’s case and recommended it be forwarded to the Securities and Futures Commission (SFC) for further action. A final decision on whether to indict Bang will be made during the SFC’s regular meeting on July 16th.
At the heart of the case are claims that Bang misled investors by falsely stating that HYBE (then Big Hit Entertainment) had no plans for an IPO. During that period, he reportedly convinced early shareholders to sell their stakes to private equity funds (PEFs) linked to his associates.
Industry sources reveal that in October 2020, Bang entered into agreements with several PEFs—including Stick Investment, Eastone Equity Partners, and Newmain Equity—stating he would receive 30% of their gains if HYBE went public within a specific timeframe. If the IPO failed, Bang agreed to buy back the shares at the original purchase price.
HYBE successfully launched its IPO within the agreed window, and Bang reportedly earned more than KRW 400 billion (around USD 290 million) through these deals.
The issue? None of this was disclosed during HYBE’s IPO filing. Although the underwriters and HYBE claimed disclosure wasn’t required under local and global rules at the time, early investors argue that the lack of transparency led to significant losses on their end.
Both police and financial regulators launched investigations after the claims surfaced. However, prosecutors previously denied two police requests for search warrants. The upcoming SFC meeting on July 16th will decide whether Bang’s case proceeds to formal prosecution.
