Financial authorities in South Korea have referred HYBE founder Bang Si-hyuk to prosecutors following an investigation into fraud allegations. Bang’s legal woes have escalated in the same week that police announced they are no longer investigating breach of trust allegations made by HYBE against the ousted founder of its Ador subsidiary, Min Hee-jin.
Bang is accused of misleading investors prior to the 2020 Initial Public Offering of K-pop powerhouse HYBE. It’s claimed that, in 2019, he told investors that no IPO was planned even though the process for a stock market listing was already underway.
That allegedly led to some investors selling their shares to a private equity outfit that Bang had a profit share agreement with, which he then allegedly profited from when the IPO went ahead.
Following a high profile investigation into those allegations, South Korea’s Futures And Securities Commission yesterday announced it had now referred Bang and three other former HYBE executives to prosecutors over alleged violations of the country’s Capital Markets Act.
Responding to that news, a spokesperson for HYBE told reporters “It is regrettable that Bang’s proactive efforts during the earlier FSC investigation to demonstrate he did not pursue personal gain were not accepted. We will actively clarify the allegations during the forthcoming investigation”.
The fraud allegations against Bang are not the only thing keeping HYBE’s lawyers busy. There is also all the legal wrangling relating to the company’s Ador subsidiary, with legal proceedings involving both the label’s founder, Min Hee-jin, and its artist, NewJeans. Min was pushed out of the CEO role at Ador last August, with NewJeans then unilaterally declaring that they were no longer working with the label.
As relations between HYBE and Min were starting to fall apart earlier in 2024, HYBE accused the then Ador CEO of “breach of trust” over allegations she tried to take control of the label, despite HYBE being the majority shareholder. That resulted in a police investigation.
However, the authorities this week seemingly concluded that investigation without finding any evidence of wrongdoing. A legal rep for Min said on Tuesday that “the breach of trust allegations filed by HYBE in April last year were found to lack sufficient grounds for criminal charges”.
HYBE quickly responded by vowing to appeal the decision to not pursue any criminal charges, insisting that new evidence has come to light since the legal battle between Ador and NewJeans began which they reckon is relevant to the breach of trust allegations.
