South Korea’s well-known entertainment company “HYBE,” founded in 2005 and comprising multiple subsidiaries, manages a number of world-renowned groups, including “BTS” (Bangtan Sonyeondan), “SEVENTEEN,” “LE SSERAFIM,” and “NewJeans.”
However, on the 21st, it was reported that founder Bang Si-hyuk was suspected of engaging in illegal transactions amounting to 190 billion KRW (about 500 million MYR), and prosecutors have already decided to apply for an arrest warrant. The public believes this move may impact the future development and plans of artists under the company.
The Financial Crimes Investigation Unit of the Seoul Metropolitan Police Agency pointed out that Bang Si-hyuk is suspected of deliberately concealing the IPO plan from investors in 2019, just before “HYBE” (then known as “Big Hit Entertainment”) was preparing to go public, and of misleading investors by saying the company had no listing plans or that the progress was delayed. He is accused of inducing original shareholders to transfer their shares at a low price to private equity funds and special purpose companies (SPCs) affiliated with him, and after the company went public, securing a 30% cut of the price difference according to non-public agreements. According to estimates by financial regulatory agencies and police, Bang Si-hyuk obtained illegal profits amounting to 190 to 200 billion KRW (about 500 to 530 million MYR), which is a clear violation of the “Capital Markets Act” regarding fraudulent and unfair transaction offenses.
After this scandal broke out, “HYBE’s” stock price once plunged more than 4.31% intraday and closed with a final drop of 2.35% on the same day. In response to the police’s application for an arrest warrant, Bang Si-hyuk, via his legal team, issued a statement expressing “considerable regret” at being detained after cooperating with the investigation for an extended period, while emphasizing that he will spare no effort to prove his innocence through legal procedures. What remains to be watched is whether this crisis of credibility will affect the operation of artists under the group, which has become a point of public debate. Recently, the US Embassy in South Korea sent a letter to the Korean police requesting assistance for Bang Si-hyuk’s planned US trip, citing BTS’s upcoming world tour. In response, the police said they would review the appropriateness of lifting Bang Si-hyuk’s exit restrictions and process relevant procedures according to the law.
Source: China Times News Network