HYBE Chairman Bang Si-hyuk Faces Arrest Warrant Over Alleged Pre-IPO Market Fraud

The Seoul Metropolitan Police Agency's Financial Crime Investigation Unit has applied for an arrest warrant for HYBE Chairman Bang Si-hyuk on charges of fraudulent unfair trading. Bang is suspected of deceiving investors into selling shares at a low price by falsely claiming there were no plans for a public listing shortly before the company’s actual IPO.

Key Facts

• Bang is accused of inducing investors to sell shares to a private equity fund (PEF) shell company associated with HYBE executives in 2019 by stating there were "no plans for listing."
• Investigations reveal HYBE had already applied for a mandatory designated auditor—an essential IPO step—at the time of these internal claims.
• Police estimate Bang secured 160–190 billion won ($123M–$146M USD) in illegal profits via a secret contract to receive 30% of the PEF's profits; associates allegedly took an additional 30 billion won ($23M USD).
• The 16-month investigation included raids on the Korea Exchange and HYBE headquarters, plus five rounds of interrogation for Bang.
• The Seoul Southern District Court froze 156.8 billion won (~$120.6M USD) worth of Bang’s HYBE shares in November 2023 as a pre-prosecution collection preservation measure.
• Under the Capital Markets Act, fraudulent trading profits exceeding 5 billion won (~$3.8M USD) can carry penalties of life imprisonment or a minimum of five years in prison.
• HYBE's stock price dropped over 2% following the news, hitting an intraday low of 244,000 won (~$188 USD).

Key Terms

• Capital Markets Act: South Korean law ensuring fair financial markets; violations involving large-scale illegal profits carry severe criminal penalties.
• Designated Auditor: An independent auditor assigned by authorities to verify financial health, a mandatory requirement for companies seeking to list on the stock exchange.
• Pre-prosecution Collection Preservation: A legal measure freezing a suspect's assets before indictment to ensure illegal gains can be confiscated.

Key Quote

"Since there are not many judicial precedents or cases related to fraudulent unfair trading, we reviewed that part from various angles." — Seoul Metropolitan Police Agency official

Next

• The Seoul Southern District Prosecutors' Office will decide whether to request the warrant from the court.
• Bang remains under a travel ban, despite reports that the U.S. Embassy requested he be permitted to travel for the 250th U.S. Independence Day and the ongoing BTS world tour.