South Korean police raided Korea Exchange offices last week (June 30) as part of an expanding investigation into alleged securities violations related to HYBE’s 2020 IPO.
Citing Korean police, Korea JoongAng Daily reported on Thursday (July 3) that the raid targeted the exchange’s Yeouido office in Seoul, where investigators secured data related to the listing review process for the K-pop giant.
Police told the news outlet that they were collecting evidence for their probe into potential capital markets law violations by HYBE Chairman Bang Si-hyuk.
In late May, it was reported that the South Korean financial watchdog, the Financial Supervisory Service (FSS), intensified its probe into Chairman Bang regarding alleged arrangements with specific investors and private equity funds prior to the company’s 2020 IPO.
While this story was initially covered at the close of 2024, it gained renewed attention more than a month ago when the Korea Economic Daily published additional details.
The publication said the FSS was conducting “a fast-tracked investigation into [Chairman] Bang’s transactions with the PEFs and plans to refer the case to prosecutors for potential criminal prosecution.”
HYBE, formerly Big Hit Entertainment, went public on the Korea Exchange in October 2020 after raising 962.6 billion South Korean won (approx. $706 million). At the time, MBW noted that the 36.6% stake held by Bang was worth 3.14 trillion won (approx. $2.3bn), making him the sixth richest person in Korea, according to the Korea Herald.
According to the allegations, Chairman Bang diverted potential investors away from HYBE’s planned public offering in 2019, instead directing them toward a private equity fund controlled by an associate, JoongAng reported.
Investigators reportedly claim Chairman Bang received 400 billion won (approx. $293 million) or 30% of the private equity fund’s investment returns after HYBE completed its listing in October 2020. Authorities reportedly allege this payment was not disclosed in the company’s required securities filings, according to the news outlet.
The latest development follows an earlier raid carried out by authorities in South Korea at HYBE’s headquarters as part of a separate investigation into alleged insider trading by a former executive.
That unnamed former exec, as reported by the Korea Times, allegedly made $176,500 by buying shares in rival K-pop company YG Entertainment’s subsidiary YG Plus, after learning that HYBE was planning to invest in the stock.
HYBE’s shares closed 5% lower in Seoul trading on Friday, the lowest level in over a month.
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