The Seoul headquarters of the Financial Services Commission, South Korea’s top financial regulator. Photo Credit: Seoul Institute
Hybe has responded to the reportedly imminent fraudulent-trading charges against Chairman Bang Si-hyuk, maintaining that its “IPO was carried out in full compliance with laws and regulations.”
The K-pop giant addressed the much-publicized subject in a statement provided to DMN. We’ve been covering the overarching financial-regulator investigation (besides a related-but-distinct police probe) for the better part of a year now.
Long story short, the Hybe founder Bang allegedly “misled” investors ahead of his company’s 2020 IPO by maintaining that a public listing wasn’t in the cards. That alleged misrepresentation reportedly prompted the involved entities to sell their holdings to private equities.
Meanwhile, Bang had allegedly inked profit-sharing agreements with some of these private equities – complete with an alleged clause compelling him to pay back their investments with interest if the IPO failed to arrive by a certain date.
Of course, that IPO did materialize before then. And Bang reportedly pocketed 30% of the private equities’ post-public Hybe stock profits, or approximately $300 million. (The relevant sellers also avoided lock-up requirements that temporarily prevented insiders and execs from cashing in on shares, per reports.)
Unsurprisingly, the alleged massive selloff is said to have sent shares tumbling for other investors, and Hybe reportedly failed to disclose the profit-sharing arrangement in regulatory filings.
It’s against this backdrop that the FSC’s Capital Market Investigation Review Committee reportedly decided during a July 9th meeting to move forward with charges under the Capital Markets Act, we broke down yesterday.
As described by BusinessKorea, the opinion was relayed to the Securities and Futures Commission (SFC), which is technically part of the Financial Services Commission as well. The SFC’s next meeting, scheduled for July 16th, will address the Bang investigation, per the same source.
It probably doesn’t need saying, but the development isn’t exactly positive for Hybe, which, along with other leading K-pop players, is grappling with the commercial rise of fictional bands to boot.
That said, the professional home of BTS and Katseye told us that it’s “fully cooperating” with the investigations, and Bang remains in place as chairman.
“We regret any concern caused by the recent reports related to our IPO process,” Hybe said to DMN. “HYBE is fully cooperating with the local authorities, including the financial regulators and the police, by submitting relevant materials and providing detailed explanations as part of the fact-finding efforts. We will take the necessary time to thoroughly demonstrate that the IPO was carried out in full compliance with laws and regulations.”
All told, Hybe shares (KRX: 352820) are down 4% during the past five trading days at $199.87/₩274,500 a pop – though that price still marks a 44% boost from July 2024.
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This post was originally authored and published by Dylan Smith Digital Music News via RSS Feed. Join today to get your news feed on Nationwide Report®.
