Bang Si Hyuk Faces Arrest Warrant Request Over Suspected Market Law Breach

Police seek an arrest warrant for Bang Si Hyuk.
He is accused of deceiving HYBE's investors.
Eventhough, he recently topped Korea's richest founders list.

The legal case surrounding HYBE's powerhouse chairman, Bang Si Hyuk, is intensifying, taking a serious turn as investigators move beyond initial questioning. What started as a probe into alleged financial misconduct has now escalated, with authorities signaling a much more aggressive phase in their investigation.

The situation has become so severe that the police are now seeking an arrest warrant, a move that has sent shockwaves through the entertainment and financial industries alike. Let's dive into the latest, complex developments.

Police Seek Arrest Warrant

In a significant escalation, the police have officially sought an arrest warrant for Bang Si Hyuk. This legal step indicates that investigators believe they have gathered sufficient evidence to formally detain him on suspicions of violating the Capital Markets Act.

The decision to seek a warrant comes after police concluded that two rounds of questioning with Bang were not yielding satisfactory results.

"As reported, additional questioning has been conducted, and we are thoroughly analyzing the collected materials and testimonies," a representative from the Seoul Metropolitan Police Agency's Major Crimes Investigation Unit stated.

"We are also carrying out a legal review," they added.

This "legal review" is a critical process; it's not just about studying the law, but about determining if the collected evidence and testimony conclusively point to a crime.

HYBE and Bang's legal team have consistently denied any wrongdoing. The company released a statement.

"We complied with all relevant laws and regulations during the listing process and will fully cooperate with the investigation," the company responded.

His attorneys are likely to argue against the necessity of detention, contending that there is no risk of evidence destruction or flight, especially since Bang was already placed under a travel ban in August. However, legal experts suggest the police are preparing for a legal battle.

"Police may seek an arrest warrant to secure custody, while the defense could argue there's no risk… It could turn into a battle between offense and defense, but given the police's current stance, the likelihood of a warrant request appears high," attorney Jung Tae Won explained.

A Look Back at the Bang Si Hyuk Case

The core of the allegations against Bang Si Hyuk dates back to 2019, prior to HYBE's blockbuster initial public offering (IPO). Authorities allege that he misled existing investors by claiming the company had no plans to go public. While he was making these assurances, preparations for the IPO were secretly underway. This alleged deception was meant to induce investors to sell their shares to a special purpose company (SPC) created by a private equity fund established by HYBE executives.

The scheme came to light when, after HYBE's hugely successful listing, this fund sold its shares. As per a pre-arranged shareholder agreement, Bang, as HYBE's largest shareholder, personally gained approximately 190 billion KRW (around $132.6 million USD) from the profits.

Attorney Jung Tae Won clarifies the gravity of the accusation.

"The key issue in Chairman Bang's case is alleged violation of Article 178 of the Capital Markets Act, which prohibits fraudulent and unfair trading. The problem lies in the fact that he denied any listing plans, then sold shares and profited after the listing took place," he clarified.

This is why such charges are treated with extreme severity. Another attorney, Noh Jong Un, noted that fraudulent trading under this act is often called a "rebellion against the capital market" because it strikes at the very foundation of market integrity and carries heavy penalties.

Despite the intense legal scrutiny and the shadow it has cast over his reputation, Bang Si Hyuk recently secured a monumental professional achievement. In a striking contrast to his legal troubles, a survey released by corporate research firm CEO Score on October 15th crowned him South Korea's wealthiest stockholder among newly listed company founders.

The survey, which excluded individuals who inherited shares and focused on companies that went public after 2020, found that the top 100 individuals held a combined stock value of KRW 22.48 trillion. Topping this prestigious list, Bang Si Hyuk's 31.6% stake in HYBE was valued at a staggering KRW 3.4983 trillion (approximately USD $2.5 billion) as of the end of September. His shares alone accounted for a massive 15.6% of the total stock value held by all 100 founders on the list.

In conclusion, Bang Si Hyuk exists in a paradox of immense success and severe legal peril. On one hand, he is the visionary architect behind one of the most successful entertainment companies in the world, with a personal fortune to prove it. On the other, he faces accusations that challenge the very integrity of his business conduct. The police's pursuit of an arrest warrant marks a critical juncture, suggesting that the evidence against him is substantial. The coming days will be decisive, determining whether the founder of the company behind global phenom BTS will be formally arrested, a move that would undoubtedly send tremors through the entire K-pop ecosystem and the financial markets.

Source: sports.khan.co.kr, Allkpop, CEO Score