Korea’s hottest boy band BTS (Bangtan Boys) is finally about to finish its military hiatus this year and make a full seven-member comeback. However, their mentor and boss, HYBE Entertainment’s founder Bang Si-hyuk, has been embroiled in controversy, accused of violating the Capital Markets Act and profiting illegally through fraud, leading to prosecution by the authorities. If found guilty, he could face up to life imprisonment. HYBE also released a statement yesterday (the 9th), apologizing and pledging full cooperation with the investigation.
According to South Korean media reports, citing information from the financial investment sector, the Capital Markets Investigation and Deliberation Committee under Korea’s Financial Services Commission held a meeting on July 7th local time to submit its opinion to the Securities and Futures Commission regarding Bang Si-hyuk’s prosecution. The decision on whether to formally hand Bang Si-hyuk over to prosecutors could be made as early as next week. Bang is accused of defrauding shareholders out of more than 400 billion Korean won (approximately 1.236 billion Malaysian ringgit); if convicted, he faces a minimum of 5 years in prison and up to life imprisonment.
The controversy surrounding Bang Si-hyuk originates from a 2019 Financial Supervisory Service investigation, which found that Bang allegedly falsely told HYBE investors that “the company has no plans for an IPO (initial public offering),” leading them to sell their shares to a private equity fund set up by his acquaintances. However, HYBE was already progressing with IPO procedures such as appointing a designated auditor, making his statements inconsistent with the actual situation.
During this period, Bang Si-hyuk gained profits as high as 400 billion won (about 1.236 billion Malaysian ringgit), yielding a 30% investment return. The Financial Supervisory Service now possesses evidence, such as the fact that HYBE signed a contract in November 2019 with Samyoung Accounting Corporation for the designated auditor required for IPO procedures. Because Bang Si-hyuk’s actions prevented early-stage HYBE shareholders from accessing key information, they suffered losses. South Korean financial authorities thus suspect Bang Si-hyuk of exploiting a loophole to avoid the post-listing major shareholder’s “protective lockup” restrictions, thus carrying out arbitrage.
Source: China Times