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Photo = Yonhap news |
[Alpha Biz= Kim Jisun] Shares of HYBE fell over 2% on May 29 after reports surfaced that founder and chairman Bang Si-hyuk is under investigation by South Korea’s Financial Supervisory Service (FSS) for alleged fraudulent trading practices.
The stock initially plunged as much as 6.99% during early trading but pared losses following HYBE’s announcement of the establishment of a new subsidiary in China.
According to sources in the financial investment industry, the FSS has launched an investigation into allegations that Bang misled early investors about the company’s initial public offering (IPO) plans, thereby inducing them to sell their shares. The FSS suspects this may constitute fraudulent trading under the Capital Markets Act.
Investigators reportedly obtained evidence suggesting that Bang's associates, including a private equity fund (PEF) founded by a close acquaintance, purchased HYBE shares from existing investors based on misinformation that there were no IPO plans.
Industry sources claim that prior to HYBE’s IPO in 2020, Bang signed an agreement to share 30% of the capital gains from the stock sale with the PEF. After the IPO, Bang is said to have received approximately KRW 400 billion (approx. USD 290 million) in proceeds—an arrangement not disclosed in the company’s securities registration statement.
The PEFs in question acquired shares from institutional investors and venture capital firms under the belief that an IPO was not forthcoming. However, evidence indicates that as early as late 2019, HYBE was actively pursuing an IPO, including applying for a designated auditor—a formal step in the listing process—while simultaneously informing investors that listing was not possible at the time.
Meanwhile, HYBE announced on the same day the official establishment of its fourth overseas subsidiary, HYBE China, marking another step in its global expansion strategy.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
