HYBE founder and Chairman Bang Si-hyuk and three other executives at the company have been referred to prosecutors in an investigation of alleged “unfair trading” in connection with the company\u2019s IPO.<\/p>\n
South Korea’s Securities and Futures Commission<\/strong> (SFC<\/strong>) decided to forward a complaint against Bang and the three others, alleging violation of the Capital Markets Act<\/strong>, Yonhap News Agency<\/a> and <\/em>other local news outlers<\/a> reported on Wednesday (July 16).<\/p>\n According to<\/a> Korea Economic Daily<\/em>, regulators suspect that Bang enriched himself unjustly by misleading HYBE investors, including venture capital firms, into believing that the company\u2019s 2020 IPO<\/a> would be delayed.<\/p>\n In reality, regulators say the IPO plans were proceeding apace, as evidenced by HYBE\u2019s hiring of an auditor. But the investors\u2019 belief there would be a delay reportedly spurred them to sell their shares to a special purpose company backed by HYBE executives.<\/p>\n This company sold its shares after the IPO, and Bang pocketed 30%<\/strong> of the profits, or around 190 billion won<\/strong> (USD $137 million<\/strong> at the current exchange rate), regulators say. That\u2019s a somewhat lower figure than the 400 billion won<\/strong> that had been previously reported<\/a>.<\/p>\n According to the Daily<\/em>, private equity funds involved included STIC Investments<\/strong>, Estone Equity Partners<\/strong>, and New Main Equity<\/strong>.<\/p>\n The Daily<\/em> describes a referral to prosecution as \u201cthe most severe regulatory action that can be taken against individuals for alleged violations of the Capital Markets Act,\u201d but it doesn\u2019t mean that Bang and his associates have been charged with any crimes.<\/p>\n Once a referral has been made, the prosecution service will open its own investigation, and will have the power to indict Bang or dismiss the charges, depending on the available evidence.<\/p>\n With news reports circulating in recent weeks about a possible referral to prosecution, HYBE issued a statement saying it would cooperate with the investigation, but believed Bang had done nothing wrong.<\/p>\n