On September 15, HYBE chairman Bang Si Hyuk was summoned and questioned by the Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency in Mapo-gu. He is currently under investigation on charges of fraudulent trading under the Capital Markets Act for deceiving investors by claiming there were no plans for Big Hit Music to go public and then acquiring their shares.
Recently, Min Hee Jin confirmed this allegation and claimed that Bang told her he had no plans of going public when he recruited her back in 2019.
In a phone call with The Hankyoreh that day, Min said, "In January 2019, when I met Chairman Bang in person to negotiate my salary contract, he told me, 'There are no plans to go public,' and suggested, 'Cash is better than stock for incentives. Let’s replace it with a signing bonus."
She continued, "I trusted his words and signed the salary contract," and added that another official who was part of the recruiting also knew of this. A signing bonus refers to cash compensation given in addition to an annual salary. Min later joined Big Hit Music as Chief Brand Officer (CBO) in July 2019. This testimony was submitted as evidence in the stock option lawsuit between Min and HYBE at the Seoul Central District Court on September 11.
The remark in January 2019 came just three months before a private equity fund (PEF) operator, founded by close associates of Bang and suspected of buying up investor shares, was established. Financial regulators suspect that this operator was a “planned fund” created solely to benefit from HYBE’s IPO. In fact, only two months after its establishment, in June 2019, the operator purchased about 25 billion KRW (18.03 million USD) worth of shares from HYBE’s co-founder and vice president, beginning to accumulate HYBE stock. Regulators are questioning whether existing investors, including the vice president, sold their stakes cheaply because they believed Bang’s statement that there were no IPO plans.
The fund, after gathering shares, began selling them intensively following HYBE’s IPO in October 2020, reaping nearly tenfold profits. As stock prices plunged almost 60% within a week, retail investors bore heavy losses. About 30% of the profits (worth around 400 billion KRW ~288.6 million USD) reportedly flowed to Bang. However, the “earn-out contract” guaranteeing Bang’s profits was not disclosed to the Korea Exchange at the time of listing.
Contrary to Bang’s claim of “no IPO plans,” evidence suggests HYBE had already begun IPO preparations. Notably, HYBE applied to the Financial Supervisory Service for the appointment of an IPO-designated auditor in September–October 2019 and signed the contract in November, a necessary step for listing. An accountant with multiple IPO experiences explained, “To move into the IPO process, at least a year of prior preparation is required. The fact that the designated auditor contract was signed in November 2019 means that IPO plans existed as early as 2018 or earlier.”
HYBE has consistently maintained that there were no IPO plans in early 2019 and that full preparations only began in early 2020. The company has reportedly submitted related documentation to authorities. A HYBE representative responded to Min’s testimony, saying, “Since this was a private conversation between Chairman Bang and Min, it is not something the company can verify at the corporate level.”
Meanwhile, police, who summoned Bang as a suspect, had already raided the Korea Exchange in Yeongdeungpo in June to secure IPO review materials, and last month searched HYBE’s headquarters in Yongsan. The Securities and Futures Commission under the Financial Services Commission also referred Bang to the prosecution in July on charges of fraudulent trading. The prosecution has since directed the Financial Supervisory Service’s special judicial police to lead the investigation.
Regarding the police questioning, Bang’s side stated to the press that day: "The IPO process was conducted in compliance with laws and regulations at the time, and we will actively cooperate with the investigation and sincerely clarify the matter."
SEE ALSO: HYBE chairman Bang Si Hyuk appears for police questioning over alleged fraudulent trading
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