"Bang Si-hyuk, the man behind BTS, faces arrest over IPO deception and stock manipulation, BBC says 'a chronic problem in South Korea'"

[Financial News] As an arrest warrant was sought for HYBE founder Bang Si-hyuk over allegations that he deceived investors before the company's listing, foreign media are once again drawing attention to the credibility of South Korea's capital market. The legal risk facing a figure who represents the global K-pop industry, combined with the country's chronic stock manipulation problem, is broadening the fallout.
Korean National Police Agency (KNPA) investigators asked prosecutors to seek an arrest warrant for Bang on suspicion that he told investors in 2019 that there were no plans for an initial public offering (IPO), while in fact pushing ahead with a listing and inducing them to sell shares at a low price. HYBE was listed on the KOSPI Composite Index in October 2020.
Investigators believe Bang signed a profit-sharing agreement with a private equity fund (PEF) and told existing investors and a venture capital firm that there were no listing plans, prompting them to transfer their stakes. He then reportedly took 30% of the gains after the listing. The amount is estimated at about 200 billion won.
Bang and HYBE have denied all allegations. They say the agreement was delivered to the IPO underwriter and was deemed not subject to disclosure. Bang is also under restrictions on leaving the country during the investigation.
The BBC said the case could affect not only Bang's personal legal standing but also HYBE's business structure and global standing. It noted that the issue emerged at a time when expectations for earnings were rising on the back of BTS's comeback tour.
BTS recently resumed its World Tour after about four years away. The industry expects the tour to generate more than 100 billion won in sales. In fact, after the tour was announced, HYBE's market cap rose by more than 100 billion won, and its share price hit a four-year high.
The BBC emphasized that Bang is "the key figure who turned BTS into a global brand," but said the case could still spread into broader questions about corporate governance and investor trust.
The case has also become a lens through which to view South Korea's stock market as a whole. The BBC pointed in particular to the repeated occurrence of stock manipulation and unfair trading in the country.
Korean financial authorities have recently stepped up crackdowns on illegal stock trading. Under the new administration, policy has shifted toward tougher penalties, with the principle that "one strike and you're out" being emphasized.
Penalties that once amounted to little more than warnings or fines have recently been strengthened to include fines of up to twice the illicit gains and account suspensions. If illegal profits of 5 billion won or more are recognized, a life sentence can be imposed.
The BBC also criticized the frequent investigations into major business figures, saying that "leaders such as Samsung Electronics chairman Lee Jae-yong and Kakao founder Kim Beom-soo have also been implicated in similar cases in the past," and arguing that repeated scrutiny of chaebol figures is undermining confidence in South Korea's capital market.
The BBC added, however, that most of them were ultimately found not guilty.

[email protected] Kim Kyung-min Reporter