Bang Si-hyuk Investigation: HYBE May Mark First Case in Korea New President’s Crackdown on Unfair Trading
On July 7, the Capital Markets Investigation and Deliberation Committee, a review body under the Financial Services Commission’s Securities and Futures Commission (SFC), held a meeting and forwarded its opinion to the SFC to refer HYBE Chairman Bang Si-hyuk and three former HYBE executives to the prosecution. The SFC is scheduled to hold a regular meeting on July 16 to address the referral of Chairman Bang.
On June 11, President Lee Jae-myung visited the Korea Exchange and stated, “To revitalize the capital market, it is crucial to establish a fair and transparent market order to secure market trust.” He added, “We will make it clear that anyone who manipulates the stock market in South Korea will face ruin.”
In particular, he emphasized, “We will introduce a ‘one-strike-out’ system, ensuring that anyone involved in stock price manipulation even once will be barred from the stock market forever,” and stressed that “unfair trading, such as the use of undisclosed information by major shareholders, will result in the recovery of illicit profits and severe punishment.”
In response, financial authorities are acting swiftly. On July 9, the Financial Services Commission, along with the Financial Supervisory Service (FSS) and the Korea Exchange, announced the “Action Plan to Eradicate Unfair Trading in the Capital Market” at the Korea Exchange in Yeouido, Seoul. To strengthen initial responses to unfair trading, a joint task force aimed at eradicating stock price manipulation will be established by the 30th of this month.
Until now, the response to unfair trading has been criticized for being fragmented across institutions, with differing investigative powers leading to ineffective coordination. The new task force, consisting of 34 members—4 from the Financial Services Commission (enforcement team), the FSS (general investigation team), and 12 from the Korea Exchange (rapid review team)—will investigate cases involving a history of unfair trading, the use of material nonpublic information by major shareholders, and the exploitation of social media or false reports.
Additionally, financial authorities have advocated for the introduction of a “one-strike-out” system for unfair trading, illegal short selling, and false disclosures. Lee Yoon-soo, a standing member of the SFC, stated, “While legal grounds for sanctions exist, they have not been effectively utilized, so we are developing detailed criteria.” He added, “With the joint task force at the forefront, we will soon present cases of ‘one-strike-out’ enforcement to the market.”
The FSS has been investigating Chairman Bang’s alleged fraudulent unfair trading. Last month, Bang Si-hyuk attended an FSS investigation. He is suspected of misleading existing investors by stating there were “no plans for an IPO” while preparing HYBE’s initial public offering (IPO) between 2019 and 2020.
Furthermore, Bang Si-hyuk is alleged to have induced existing investors to sell their HYBE shares to a private equity fund (PEF) established by an acquaintance, with an agreement to receive 30% of the profits from the sale. This agreement was reportedly omitted from HYBE’s securities registration statement, and the profit-sharing amount Bang Si-hyuk received from the PEF is said to be approximately 400 billion KRW.
Separately, the Seoul Metropolitan Police Agency’s Financial Crime Investigation Unit is also investigating, but two requests for search warrants were rejected by the prosecution.
In response, HYBE stated, “We discussed a range of scenarios with investors, including IPO and other fundraising methods. At no point did we deny or hide plans to go public. In fact, most investors were informed that both IPO and investment attraction were being pursued simultaneously.”
The company emphasized that the former investors were fully aware of HYBE’s strategic direction at the time and made the decision to sell their shares based on that understanding. HYBE also stated that legal reviews concluded the contract was not subject to mandatory disclosure.
HYBE also stated, “Regarding the issues raised, we are actively cooperating with financial authorities and the police by submitting detailed explanations and relevant materials. Although it may take some time, we will thoroughly demonstrate that the IPO was conducted in compliance with laws and regulations.”
Despite the unexpected turbulence, HYBE remains focused on its core mission. As a leading force in the global music industry, the company is not only cooperating transparently on the legal front but also continuing to move forward with artist activities and international projects as planned.
The return of BTS in spring next year and the ongoing global expansion of HYBE’s content and artist development pipelines serve as strong indicators of the company’s direction and long-term viability.