After a lengthy investigation, referred to prosecutors... Bang Si-hyuk and others sent on charges of 263.1 billion won in illicit gains

[Financial News] HYIVE executives, including Chairman Bang Si-hyuk, and private equity fund officials have been referred to the prosecution on charges of obtaining listing profits by inducing existing shareholders to sell their shares while preparing for an initial public offering (IPO) by claiming there were no plans to list.
On the 3rd, the Financial Crime Investigation Division of the Seoul Metropolitan Police Agency announced that it had referred five people, including Chairman Bang, to the prosecution without detention on charges of fraudulent trading under the Capital Markets Act. Regarding Mr. A, the former Chief Investment Officer (CIO) of Hive who is currently staying overseas, an arrest warrant has been issued, a wanted notice has been issued, and an Interpol Red Notice has been requested.
According to the police, Big Hit Entertainment, the predecessor of HYBE, formed a listing preparation team around July 2019. However, investigations revealed that while it encouraged existing shareholders to sell their shares between August and October of the same year with the understanding that there were no plans for a listing, it attracted investors on the premise of a listing while recruiting private equity fund investors between October and November.
Subsequently, a special purpose vehicle (SPC) established by the private equity fund purchased Big Hit shares from existing shareholders in November of the same year. Big Hit was listed on the stock market in October 2020, and the private equity fund subsequently sold its holdings.
The police determined that although the Hive side and the private equity fund side were outwardly separate, Chairman Bang was substantially involved in both parties from the establishment of the private equity fund to the preparation for listing, and led the entire process.
The police calculated the suspects' illicit gains to be a total of 263.1 billion won. The police identified the amount excluding distributions to private equity fund investors, acquisition financing-related costs, and transaction taxes and fees as the illicit gains. A court order for pre-indictment forfeiture preservation was obtained for the entire amount.

It has been revealed that there were legal differences between the police and the prosecution regarding the handling of Chairman Bang's custody. The police applied for an arrest warrant against Chairman Bang twice, but the prosecution did not request one after demanding further investigation. Although the legal differences remained unresolved even after this, the police determined that there were no new circumstances warranting further review of his custody and referred Chairman Bang to the prosecution without detention.
The police determined that a series of acts, which went beyond deceiving individual existing shareholders and involved profiting by exploiting information asymmetry while monopolizing listing information, undermined the fairness and trust of the capital market. Accordingly, charges of fraudulent unfair trading under the Capital Markets Act were applied.
Chairman Bang's legal team denies the charges. Their position is that the IPO was not a finalized plan at the time, and the decision and timing of the listing were fluid as other fundraising methods, such as attracting foreign investment, were also being reviewed. Furthermore, they argue that the profit-sharing agreement between Chairman Bang and the private equity fund underwent legal review as a quid pro quo for assuming investment risks, and that at the time, there were no regulations mandating the disclosure of such shareholder agreements during the listing process.
The police launched a pre-indictment investigation following media reports in December 2024, and after questioning those involved, transitioned to a formal investigation in May of last year.
Regarding the prolonged investigation, a police official explained, "As this is an unprecedented case, we have conducted a multifaceted review involving the analysis of extensive data, legal examination, and consultation with external experts."
[email protected] Choi Seung-han Reporter