Photo Credit: Bang Si-hyuk, Chairman of Hybe’s board of directors
South Korean financial authorities are filing criminal charges against Hybe chairman Bang Si-hyuk for alleged fraudulent trading.
According to financial authorities on Wednesday, South Korea’s Capital Market Investigation Review Committee made the decision to file a criminal complaint against Hybe chairman Bang Si-hyuk. The charges, due to be filed next week, come amid allegations of fraudulent trading under the Capital Markets Act.
The committee, a deliberative body under the Securities and Futures Commission of the Financial Services Commission, is scheduled to hold a regular meeting on July 16 to process the agenda. “We saw the need to take a serious view as Bang directly violated the Capital Markets Act,” said an official from the financial authorities.
Industry sources reveal that before Hybe’s listing in 2020, Bang signed a contract with a private equity fund established by his acquaintance to share 30% of the profit from stock sales. In doing so, he received around 400 billion won ($290~ million) in settlement after the listing.
These private equity funds also purchased Hybe shares from existing investors and venture capital firms. The financial authorities have reportedly secured evidence that Bang’s side informed existing investors that listing was currently impossible, but secretly pursued listing through applications for designated audits.
Financial authorities suspect Bang used private equity funds to circumvent the “lock-up” period, which prohibits major shareholders and executives from selling shares for a certain amount of time after listing.
“Even if it takes some time, we will faithfully explain that the listing at the time was conducted in compliance with laws and regulations,” said a Hybe representative.
Of note, the contract between Bang and the private equity funds was omitted from both the Korea Exchange’s listing review and the Financial Supervisory Service’s securities registration statement submission process. That led to criticism that early investors who bought Hybe shares without this information suffered losses.
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