Exclusive: HYBE Chairman Under Criminal Investigation
South Korea’s Financial Regulators Take Action Against HYBE Chairman
South Korea’s financial regulators have taken a significant step in their ongoing investigation into the entertainment giant HYBE, which is best known for managing the global phenomenon BTS. The regulatory body has decided to file a criminal complaint against Bang Si-hyuk, the company’s chairman, on allegations of securities fraud related to HYBE’s initial public offering (IPO).
The case was confirmed by officials on July 8 and revolves around claims that Bang misled early shareholders by denying any plans for an IPO. This led investors to sell their shares under the impression that the company would not go public, only for them to later discover that the IPO was indeed planned. According to reports, Bang allegedly made approximately 200 billion won ($145 million) in profit through a private equity fund linked to HYBE insiders once the company went public.
Three current and former executives associated with this scheme are also expected to face criminal referral. The complaint represents the most severe sanction available under South Korean capital markets law and is being recommended by the Capital Market Investigation Division, a unit under the Securities and Futures Commission (SFC). The SFC, which operates within the broader framework of the Financial Services Commission (FSC), is set to finalize its recommendation at a meeting on July 16.
If approved, this action would mark the first top-tier criminal referral by financial authorities under President Lee Jae-myung, who has pledged to take a strong stance against stock manipulation since assuming office last month. A senior regulatory official stated, “Chairman Bang’s actions involved deceiving ordinary investors and inflicting substantial financial harm.” They added that the situation was serious enough to warrant the most stringent legal action.
Under Article 178 of the Financial Investment Services and Capital Markets Act, individuals who secure illicit gains exceeding 5 billion won face a minimum five-year prison sentence or even life in prison. Internal findings indicate that Bang entered into a profit-sharing agreement in 2020 with a private equity vehicle established by HYBE executives. Under the deal, Bang was to receive more than 30% of the fund’s profits from reselling shares acquired before HYBE’s IPO.
At the time, Bang allegedly assured existing shareholders that there were no immediate plans for a public listing and encouraged them to sell their shares to the fund—offering what appeared to be premium prices. Many investors complied, believing the IPO was off the table. Soon after, HYBE filed its public offering paperwork, and the fund offloaded the shares, netting significant profits. Bang reportedly received approximately 200 billion won from the proceeds.
Documents reveal that HYBE had already begun IPO preparations during this period, including applying for an external auditor—a necessary step for listing. However, the company failed to disclose Bang’s private profit-sharing deal in its IPO registration filing, raising concerns about the omission of key information from prospective investors.
To prevent stock dumping by controlling shareholders post-listing, South Korean regulations impose a lock-up period. Investigators believe the private equity fund may have been used as a “pass-through” vehicle to bypass these restrictions.
“Retail investors were misled, and the stock was dumped in a way that caused direct losses,” said one senior official. “Given the fund’s ties to company insiders, we view this as a coordinated market manipulation effort with strong grounds for prosecution.”
This move aligns closely with President Lee’s regulatory agenda. During his campaign, he promised a “one-strike-out” policy for capital market misconduct—a zero-tolerance approach targeting stock manipulation and insider dealing. Within days of his inauguration in June, Lee visited the Korea Exchange and vowed to restore retail investor trust. The Bang case, involving one of Korea’s most high-profile entrepreneurs, is being viewed as an early test of that policy in action.
Bang has denied any wrongdoing. During a recent interview with the Financial Supervisory Service (FSS), he maintained that the transaction did not breach capital market rules. However, authorities concluded that the arrangement violated provisions banning novel or opaque trading schemes designed to deceive investors.
The SFC’s July 16 vote is expected to greenlight the criminal filing, marking a pivotal moment in South Korea’s efforts to combat financial misconduct.