K-pop band BTS’ agency HYBE was raided for stock fraud on Thursday. The Seoul headquarters of HYBE has been raided as part of the investigation into alleged $146 million trading fraud linked to the company’s founder, Bang Si-hyuk.
HYBE’s financial regulator has reportedly referred Bang to prosecutors to investigate his activities during the company's stock market listing.
According to Korean media outlets, the Financial Crimes Investigation Unit of the Seoul Metropolitan Police Agency has released a statement and said, “We are conducting a search and seizure at HYBE's headquarters in Yongsan District.”
For the unaware, Bang Si-hyuk and his associates are accused of misleading their investors in 2019 about HYBE's (then BigHit Entertainment) plans for an IPO in a 400 billion KRW (approx. USD 290 million) deal. The company allegedly claimed at the time that there were no immediate plans due to unfavourable market conditions, when in fact the company was preparing to go public.
They are accused of hiding the profit-sharing percentage. The media reports have suggested that these executives had eventually profited from share sales after the listing. Meanwhile, Bang has been accused of earning around 200 billion won (US$146 million) from the sales.
The officials suspect that the discrepancy might not have been accidental. As HYBE was preparing for its highly anticipated stock market debut in 2020, some early investors sold their shares based on management's statements, while private equity firms like Easton PE and Newmain Equity acquired stakes later that year.
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