[Market Focus] HYBE Weakens on News of Bang Si-hyuk's 'Fraudulent Transaction' Investigation

HYBE shares are showing weakness on May 29 following news that founder and chairman Bang Si-hyuk is under investigation by the Financial Supervisory Service for alleged fraudulent transactions.

Yonhap News

As of 9:25 a.m. on this day, HYBE's stock price was trading at 269,000 won per share, down 3.58% from the previous session.

This decline is attributed to reports that the Financial Supervisory Service has obtained evidence that Chairman Bang misled shareholders by claiming there were no plans for an initial public offering (IPO) during HYBE's listing process in the past, while actually pursuing the company's listing. He is now under investigation for alleged fraudulent transactions in violation of the Capital Markets Act.

Before HYBE's IPO in 2020, Bang entered into a contract to share 30% of the capital gains from his stake sale with a private equity fund (PEF) established by an acquaintance. These private equity funds purchased HYBE shares from existing investors, including institutional investors and venture capital (VC) firms. It has been reported that Bang received approximately 400 billion won after the listing.

This contract was not disclosed in the securities registration statement during the listing process. It is reported that the Financial Supervisory Service has obtained evidence that Bang's side told existing investors that listing was not possible at the time, while simultaneously applying for a designated auditor and pursuing the IPO.

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