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HYBE Chairman Bang Si-hyuk’s Assets Frozen: 156.8 Billion Won in HYBE Shares Subject to Attachment

[비즈한국] It has been confirmed that HYBE Chairman Bang Si-hyuk, who is suspected of "fraudulent unfair trading" during the HYBE352820 listing process, has recently had 156.8 billion won worth of his HYBE shares frozen by the prosecution. Investigative authorities currently suspect that the fraudulent activities involving Chairman Bang were carried out systematically.

156.8 Billion Won of HYBE Chairman Bang Si-hyuk's Shares Under Pre-indictment Attachment

According to Bizhankook’s reporting, the Seoul Southern District Prosecutors' Office recently placed a pre-indictment attachment on 156.8 billion won worth of HYBE shares owned by Chairman Bang Si-hyuk, who is accused of fraudulent unfair trading (violation of the Capital Markets Act). Previously, on October 16, the prosecution filed for the attachment to prevent Chairman Bang from disposing of profits allegedly gained through criminal activity, and the Seoul Southern District Court granted the request on the 19th of last month. As a result, any disposal of the 156.8 billion won worth of HYBE shares held by Chairman Bang is strictly prohibited.

A pre-indictment attachment is a measure to freeze property subject to forfeiture to prevent a suspect from disposing of it before a final court ruling. If a prosecutor determines that there is a reason and necessity for the attachment, they can obtain a court order even before a formal indictment is filed. Police officers can request this through a prosecutor. This specific attachment appears to have been requested by the Seoul Metropolitan Police Agency's Financial Crime Investigation Division or the Financial Supervisory Service's special judicial police, who are investigating the case.

The court granted the attachment request, stating, "There is substantial reason to believe that the suspect (Bang Si-hyuk) acquired criminal proceeds from the crimes detailed in the charge, making it subject to forfeiture under the Act on the Regulation and Punishment of Criminal Proceeds Concealment, and that there is a risk that the judgment for forfeiture could not be executed or would be significantly difficult to carry out."

Chairman Bang Si-hyuk is currently under investigation for allegedly engaging in fraudulent unfair trading prohibited by the Capital Markets Act. Investigative authorities suspect that during the process of pushing for the listing of Big Hit Entertainment, the predecessor to HYBE, Chairman Bang deceived Big Hit investors by claiming there were "no plans for an IPO," and subsequently pressured them to sell their shares to a special purpose vehicle (SPV) associated with a private equity fund linked to him. Under the Capital Markets Act, no one may use fraudulent means, plans, or schemes in connection with the sale or other transactions of financial investment products.

Chairman Bang is the founder and largest shareholder of HYBE. After working as a producer at JYP Entertainment, he established Big Hit Entertainment in February 2005. He later grew the company by successfully debuting the idol group BTS. As of September this year, Chairman Bang held 13.15 million shares (31.57%) of HYBE, with a market value of 3.8928 trillion won (based on the closing price on the 3rd). Since stepping down as CEO in July 2021, Chairman Bang has served only as Chairman of the Board.

Investigative Authorities Suspect "Internal Accomplices"

Investigative authorities currently suspect that the fraudulent unfair trading was conducted systematically. According to the summary of charges submitted to the court by the prosecution, they believe Chairman Bang conspired with internal accomplices to establish a private equity fund during the IPO process, secure shares from existing shareholders, and sell them on the market after the listing to capture listing profits.

Specific actions by Chairman Bang Si-hyuk also appear to have been identified. The prosecution noted that in October 2019, at a Japanese restaurant in Gangnam, Chairman Bang told the head of an asset management firm—who was a Big Hit shareholder—that "a foreign long-term investment fund wants to invest in Big Hit Entertainment," adding, "There is absolutely no plan to list Big Hit on the stock market. I will introduce you to a fund, so please sell the Big Hit shares held by your firm to realize your profits."

Authorities believe Chairman Bang and his accomplices gained unfair profits through these fraudulent activities. They estimate that the group purchased 155,187 shares from existing shareholders for 104.6 billion won and subsequently acquired a total of 632.2 billion won by selling them heavily during the first five trading days following the HYBE IPO and again between May and June of the following year. The "unfair profit" obtained by Chairman Bang and his accomplices is estimated at 262.6 billion won, excluding investment returns distributed to private equity investors, acquisition financing repayments, and incidental costs.

A HYBE representative stated, "The pre-indictment attachment is a standard procedural step and is not a judgment on guilt or innocence. We have participated in the investigation diligently and provided explanations, and we are currently awaiting the decision of the investigative authorities."