Korea’s financial authorities have launched a high-profile crackdown on Bang Si Hyuk, Chairman of HYBE, in what may become the first major case under President Lee Jae Myung’s pledge to eliminate unfair trading practices in the capital market.
Bang is facing a criminal complaint filed by the Financial Services Commission (FSC) for allegedly engaging in fraudulent transactions that violate the Capital Markets Act.
On July 7, the Capital Markets Investigation and Deliberation Committee, an advisory body under the Securities and Futures Commission (SFC), held a meeting and recommended that Bang and three former HYBE executives be referred for prosecution. The SFC is expected to finalize its decision during a regular meeting on July 16.
The move aligns with President Lee Jae Myung’s firm stance on restoring fairness and transparency in Korea’s financial markets. During a visit to the Korea Exchange on June 11, President Lee stated, "To revitalize the capital market, it is essential to establish a fair and transparent order to build trust." He added, "We will make it absolutely clear that playing games in the Korean stock market will lead to financial ruin."
He also warned of a “one-strike-out” policy, saying that anyone who manipulates stock prices even once would be permanently barred from participating in the market. He emphasized that the misuse of undisclosed information by major shareholders would be strictly punished and that any unfair gains would be recovered.
In response to the president’s directive, financial regulators are moving swiftly. On July 9, the FSC, together with the Financial Supervisory Service (FSS) and the Korea Exchange, announced a joint action plan aimed at eradicating unfair trading practices. A new joint task force dedicated to combating stock manipulation is scheduled to launch by July 30.
This 34-member task force will include investigators from the FSC, FSS, and Korea Exchange. It will be responsible for promptly responding to suspected cases involving market manipulation, insider trading by major shareholders, and the use of false information through social media or fake news.
Until now, regulatory efforts have been hindered by fragmented oversight and inconsistent authority across institutions. The newly formed task force is expected to overcome these challenges with specialized teams, including a forced investigation unit from the FSC, a general investigation unit from the FSS, and a rapid review team from the Korea Exchange.
The SFC also confirmed its intention to apply the “one-strike-out” rule more broadly to include unfair trading, illegal short selling, and false disclosures. Lee Yoon Soo, a standing commissioner of the SFC, explained that the legal foundation for enforcement is already in place. However, detailed criteria are still being finalized to ensure the rule is applied effectively. He added that the joint task force is expected to produce the first real cases applying this rule in the near future.
Meanwhile, the FSS has already conducted an investigation into Bang’s alleged misconduct. He appeared for questioning late last month regarding accusations that, between 2019 and 2020, he falsely told early investors there were no plans for HYBE to go public, even as the company was actively preparing for its IPO.
In addition, Bang allegedly arranged for early investors to sell their HYBE shares to a private equity fund established by an acquaintance. He reportedly signed an agreement to receive 30 percent of the fund’s profits. This clause was not disclosed in HYBE’s official securities filings. Reports indicate that Bang received approximately 400 billion KRW (around $290 million), through this deal.
Separately, the Seoul Metropolitan Police Agency’s financial crimes unit is conducting its own investigation. However, prosecutors have twice rejected requests for search warrants related to the case.
HYBE released an official statement, saying, "We are actively cooperating with financial and police authorities by submitting detailed explanations and relevant documents. Although the process may take some time, we intend to clearly demonstrate that our IPO was conducted in full compliance with applicable laws and regulations."
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