'Father of BTS' Bang Si-hyuk, Chairman of HYBE, Faces Arrest Warrant..."Regretful Despite Full Cooperation"

Bang Si-hyuk, Chairman of HYBE. Photo by Yonhap News Agency

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The police have requested an arrest warrant for Bang Si-hyuk, Chairman of HYBE, on charges of obtaining illicit gains by deceiving investors during the company's stock market listing process. This comes one year and six months after the investigation began.

According to the police on April 21, the Financial Crimes Investigation Unit of the Seoul Metropolitan Police Agency has applied for an arrest warrant for Chairman Bang on suspicion of violating the Capital Markets Act (fraudulent unfair trading). The police stated that they decided to detain him in order to respond strictly to crimes that disrupt the capital market.

Chairman Bang is accused of misleading existing investors in 2019, ahead of HYBE’s initial public offering (IPO), by falsely claiming there were no plans for a listing, thereby inducing them to sell their shares. He is alleged to have arranged for investors to transfer their holdings to a private equity fund (PEF) involving HYBE executives, and then entered into a secret agreement to receive about 30% of the capital gains after the listing.

The police believe that Chairman Bang gained illicit profits of approximately 190 billion to 200 billion won as the private equity fund disposed of its shares immediately after HYBE’s IPO. Previously, in November last year, the court approved a pre-indictment seizure of roughly 150 billion won worth of Bang’s shares.

The Capital Markets Act prohibits acts such as making false statements to obtain property gains or employing fraudulent schemes in connection with financial investment products, including unlisted shares. Violations involving profits of 5 billion won or more are punishable by life imprisonment or imprisonment for at least five years.

Chairman Bang maintains that he did not deceive early investors and that the decisions were made at the investors' request. He also explained that the profit-sharing terms were first proposed by the investors. He stated, "At that time, the lead underwriters legally reviewed the shareholder agreements," and added, "I believe there was no violation of any laws or regulations."

Yongsan HYBE Building. Photo by Jo Yongjun

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The police obtained intelligence at the end of 2024, and last year conducted searches and seizures at HYBE headquarters and the Korea Exchange. Chairman Bang was summoned and questioned five times between September and November last year; however, there were no attempts to secure his custody for the subsequent five months, leading to criticism of a delayed investigation.

The ban on Chairman Bang leaving the country remains in effect. The U.S. Embassy in Korea recently sent a letter requesting the lifting of the travel ban, citing BTS’s world tour schedule and other reasons, but the police rejected the request on April 20.

Chairman Bang’s legal counsel issued a statement immediately after the arrest warrant application, voicing opposition. The lawyer stated, "It is regrettable that an arrest warrant has been requested despite Chairman Bang’s long-standing cooperation with the investigation," adding, "We will faithfully participate in future legal proceedings and do our utmost to clarify the facts."

HYBE’s stock price fluctuated on news of the arrest warrant application for Chairman Bang. According to the Korea Exchange, HYBE opened at 258,000 won, up 1.18% from the previous trading day, but at one point during the session fell by more than 4%.

Foreign media outlets reported the news swiftly. The Associated Press stated, "At a time when BTS’s album ‘Arirang’ has ranked high on the Billboard main chart for four consecutive weeks and the group's full-member comeback world tour is set to begin, this legal risk is acting as a burden on HYBE’s public relations."

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