South Korea’s SFC refers HYBE’s Bang Si Hyuk to prosecutors for suspected market manipulation

South Korea’s Securities and Futures Commission (SFC), under the Financial Services Commission (FSC), has filed a formal complaint with prosecutors against Bang Si Hyuk, Chairman of HYBE, on allegations of "fraudulent unfair trading" in violation of the Capital Markets Act.

Following its 14th regular meeting on July 16, the SFC announced that it has referred Bang and several former HYBE executives to the prosecution. They are accused of deceiving existing shareholders and using a specially planned private equity fund to commit violations of Article 178 of the Capital Markets Act, which prohibits unfair trading practices.

This action represents the most severe disciplinary measure the financial authorities can take and marks the first such sanction imposed on a major corporate leader under the current Yoon Suk Yeol administration.

According to the SFC, Bang and the former executives, during the initial public offering (IPO) process of HYBE (formerly Big Hit Entertainment), misled existing shareholders into believing the IPO would be delayed. This allegedly induced them to sell their shares to a special purpose company (SPC) established by a private equity fund.

The fund in question was operated by an asset management firm founded and funded by a HYBE executive. Bang reportedly signed an agreement to receive 30% of the profit from the resale of shares by the fund, ultimately earning approximately 400 billion KRW (about $290 million) in illicit gains.

Notably, this profit-sharing contract was omitted from HYBE’s official securities registration statement at the time of its 2020 IPO, and Bang is accused of concealing his relationship with the fund operated by the executive.

In a statement, the FSC said, “We will fully cooperate with the prosecution to ensure a thorough investigation into these allegations. All identified violations will be rigorously examined and met with strict measures to uphold order and integrity in the capital markets.”