BTS agency chairman Bang Si Hyuk faces indictment over alleged 400 billion KRW stock fraud, HYBE reacts

Bang Si Hyuk, founder and chairman of HYBE, is now facing the chance of a formal indictment. The charges are tied to alleged capital market violations linked to HYBE’s IPO direction of.

On July 9, financial regulators confirmed that the Capital Market Investigation Deliberation Committee (CMIDC) had reviewed the case. The CMIDC operates below the Monetary Companies and products Rate’s (FSC) Securities and Futures Rate (SFC). After deliberation, the committee voted to escalate the subject.

The CMIDC’s decision to forward Bang’s case to the SFC indicates the severity of the allegations. The SFC is determined to originate the last call for the duration of its scheduled regular assembly on July 16. If it facets with the committee’s suggestion, Bang Si Hyuk also can face prison charges for spurious and unfair buying and selling below Korea’s Capital Markets Act.

HYBE responds

Rapidly after the news broke, HYBE issued an legitimate assertion addressing the investigation. The corporate started by expressing remorse over the negative attention surrounding its IPO direction of. They acknowledged the scenario it would possibly per chance maybe per chance well even contain triggered the final public and traders.

HYBE emphasized that it is far “actively cooperating with financial regulators and the police by providing detailed explanations and associated materials associated to the subject”. Basically basically basically based on the agency, it remains assured that the final public checklist adopted all lawful requirements in location at the time. Nevertheless, it additionally admitted that the direction of of clearing the allegations also can take time.

What sparked the investigation into HYBE’s IPO dealings?

The controversy dates abet to 2020 sooner than HYBE (then working as Grand Hit Leisure) debuted on the stock market. Basically basically basically based on investigative sources and experiences from the funding sector, Bang Si Hyuk allegedly signed confidential shareholder agreements with several non-public equity companies. These incorporated Stick Funding, Eastone Equity Partners, and Newmain Equity. The agreements were made months sooner than HYBE’s public checklist.

These agreements reportedly incorporated a earnings-sharing clause. It acknowledged that Bang would accept 30% of the capital positive aspects if the company efficiently went public within a particular timeframe. If the IPO failed, Bang would be obligated to repurchase the shares at their customary designate, limiting the likelihood for the PEFs.

HYBE efficiently launched its IPO for the duration of the agreed-upon length, and Bang is reported to contain earned over 400 billion KRW because this initiative. Nevertheless, these deals were by no manner publicly disclosed for the duration of the IPO direction of.

HYBE and the underwriters were reportedly responsive to the preparations. Nevertheless, they concluded, in holding with lawful counsel at the time, that the agreements didn’t descend below necessary disclosure requirements. Critics now argue that omitting this files deprived early traders of elephantine transparency and will contain influenced portion prices and decisions.

Search warrants for HYBE denied twice

Because the scenario obtained traction, early traders started voicing frustration, claiming they suffered financial damage on account of the lack of conception. Public strain intensified, prompting both financial regulators and regulation enforcement to begin separate investigations into the subject.

Law enforcement authorities contain already tried twice to accumulate search warrants for HYBE, but prosecutors rejected both requests. The tip result of the July 16 assembly will seemingly resolve whether or no longer Bang Si Hyuk is formally prosecuted for his alleged role within the misconduct.