Bang Si-hyuk, founder and chairman of K-pop powerhouse HYBE Co., appeared before Seoul police on Tuesday morning for questioning for his alleged fraudulent stock trading linked to the company’s initial public offering in 2020.
The police probe comes about two months after South Korea’s financial authority in July referred him to prosecutors, the toughest regulatory action that can be taken against individuals for alleged violations of the Capital Markets Act.
Authorities allege Bang hinted to venture capitalists and other institutional investors that HYBE’s listing would be delayed, prompting those early investors to sell shares to a special-purpose company backed by HYBE executives.
The Financial Services Commission (FSC) found that HYBE was already preparing its IPO by hiring an auditor at the time, calling the tip misleading.
The special purpose vehicle later sold the company shares after the IPO, with Bang allegedly securing 30% of the gains through a private agreement.
Regulators estimate he reaped about 190 billion won ($137 million) from the deal.
Investigators also suspect he used the private-equity fund structure to skirt lock-up restrictions designed to ban major shareholders from cashing out immediately after a listing.
BANG DENIES WRONGDOING
The probe has gained traction after The Korea Economic Daily exclusively reported last November on the undisclosed private agreement between Bang and the PEFs.
Police raided the Korea Exchange and HYBE’s headquarters office in June and July, respectively, to collect evidence.
Bang is also under investigation by the Financial Supervisory Service (FSS) for the allegation.
The HYBE chair, making his first public appearance since the probe began, told reporters at the Seoul Metropolitan Police Agency building on Tuesday that he was “deeply sorry for causing concerns” and would cooperate fully with investigators.
He has denied wrongdoing, including allegations of misleading investors and profit-sharing arrangements.
According to industry sources, Bang’s side contends that other investors also booked sizable profits from selling their stakes at the time, and that his own gains were compensation for bearing the risk tied to a put option.
HYBE shares traded 2.4% lower at 285,000 won on Monday afternoon.
By Yu-Jin Kim
magiclamp@hankyung.com
Sookyung Seo edited this article.
