Facing the music? HYBE Chairman Bang referred to prosecutors over 263.1 billion won in gains.

HYBE founder and Chairman Bang Si-hyuk has been referred to prosecutors over allegations that he and others pocketed some 263.1 billion won ($193.4 million) in illicit gains by misleading investors ahead of the entertainment giant’s stock market debut.

Bang and four others, including HYBE executives and private equity fund officials, were referred to prosecutors without detention on charges of fraudulent trading under the Capital Markets Act, the Seoul Metropolitan Police Agency's financial crimes investigation division said on Thursday. The referral comes about one year and nine months after police began a preliminary investigation in December 2024.

The Capital Markets Act prohibits financial gain through false statements or deceptive schemes in connection with financial investment products, including unlisted shares. Those who violate the act and pocket proceeds of 5 billion won or more can face a prison sentence of five years to life.

Police allege that the suspects misled existing shareholders in 2019 by telling them that HYBE, then known as Big Hit Entertainment, had no plans to go public despite preparations for an initial public offering (IPO). The shareholders were then encouraged to sell their stakes to an affiliated private equity fund.

The private equity fund, meanwhile, allegedly raised money from investors by telling them that HYBE’s listing had been confirmed and that profits were guaranteed. It then used the funds to acquire shares in HYBE.

Police believe Bang was involved in the process, including by instructing HYBE executives to consider an IPO as a way to raise capital.

HYBE ultimately went public in October 2020. Police allege that Bang and others had signed a confidential agreement with the private equity fund in advance that entitled them to a portion of the profits generated when the fund sold its shares after the listing.

Police estimate that the group made about 263.1 billion won in illicit gains. A court has approved a pre-indictment preservation order covering the full amount to prevent the proceeds from being disposed of before a potential conviction.

Police converted the preliminary inquiry into a formal investigation in May 2025 and reportedly questioned Bang five times between September and November last year.

Investigators raided the Korea Exchange in June last year and secured documents related to the review of HYBE’s listing. They searched HYBE’s headquarters in Yongsan District, central Seoul, the following month.

Police also sought detention warrants for Bang twice in April, but prosecutors rejected the requests, saying, “At this stage, there is insufficient evidence demonstrating the need for detention,” among other reasons.

Police have separately obtained an arrest warrant for a former HYBE chief investment officer surnamed Kim, who left Korea in June shortly before investigators searched his premises. They have also requested an Interpol Red Notice for Kim.

“This case involves conduct that disrupted the order of the capital market and undermined its fairness and credibility,” a police official said. “We will work to establish a fair capital market that the public can trust when making investments.”

HYBE is a major entertainment company with its labels managing K-pop acts such as BTS and girl groups Katseye and NewJeans.

BY HAN CHAN-WOO [[email protected]]