Hybe chairman referred to prosecution over alleged deception of shareholders

Bang Si-hyuk, the founder and chairman of the prominent South Korean K-pop company Hybe, has been referred to prosecutors on charges of deceiving shareholders into selling their shares prior to the company's IPO, according to the Seoul Metropolitan Police Agency.

The Seoul Southern District Prosecutors Office has been investigating Bang for suspected fraudulent trading under the Capital Market Act. If found guilty, Bang is accused of defrauding investors in 2019, resulting in a profit of 263.1 billion won (US$193.7 million), which he allegedly pocketed through the subsequent IPO.

Four additional individuals have also been referred to the prosecution on the same charge. Police have alleged that Bang manipulated Hybe shareholders into selling their shares to a private equity fund he helped establish between August and October 2019. He reportedly claimed there were no plans for an IPO at that time.

From October to November 2019, Bang allegedly lied to investors in the fund, claiming an IPO was being planned to attract more investment. The illegal profits have been preserved for forfeiture under a court order, but Bang has not been physically detained as the prosecution previously rejected two requests for an arrest warrant due to insufficient evidence.

A conviction for making more than 5 billion won in profits through fraudulent financial investment products can result in a prison sentence of at least five years or life imprisonment. The referral to prosecutors came 21 months after the police initiated an internal investigation into the alleged deception.