Prosecutors have rejected police requests for an arrest warrant for HYBE Chairman Bang Si-hyuk, who is accused of misleading investors during the company's listing process and reaping large illicit gains. Prosecutors said they did not see sufficient grounds at this stage to justify detention.
The Seoul Southern District Prosecutors Office's Financial and Securities Crime Joint Investigation Division said Thursday it returned the warrant request to police and asked for additional investigation. Bang is suspected of fraudulent unfair trading under the Capital Markets Act. Prosecutors said there was "insufficient explanation" for why an arrest was necessary at this point.
The Seoul Metropolitan Police Agency's Financial Crimes Investigation Division had sought the warrant on April 21, after about 16 months of investigation since launching an internal probe in December 2024.
Police suspect that in 2019, ahead of HYBE's IPO, then known as Big Hit Entertainment, Bang told existing investors that there were no plans to go public or that the IPO would be delayed, inducing them to sell their stakes. Police believe the shares were steered to a special-purpose company set up by a private equity fund involving former HYBE executives.
After HYBE listed on the Kospi in October 2020, the private equity fund sold the shares. Investigators say Bang received a portion of the profits under a prearranged shareholder agreement. Police estimate the alleged illicit gains at about 190 billion won, and as much as 260 billion won.
Under the Capital Markets Act, using false information or improper schemes to gain from trading financial investment products is prohibited. If the illicit gain exceeds 5 billion won, the penalty can be life imprisonment or at least five years in prison.
Police said they searched the Korea Exchange and HYBE headquarters, questioned Bang five times, imposed a travel ban and sought asset preservation measures for some shares. They also cited concerns about possible evidence destruction, including circumstances such as a phone replacement, according to reports.
With prosecutors returning the warrant request, the case moves into a supplementary phase. Police are expected to decide whether to seek the warrant again after further legal review and additional evidence collection.
Bang's side has denied all allegations, saying the IPO was not finalized at the time and that the share sales were made at investors' request. It also says the profit-sharing arrangement was proposed by the investor side.
The case has drawn attention as an alleged capital markets crime tied to the listing of a major entertainment company. Investigators are expected to focus on whether fraudulent unfair trading can be established and on the scope of any illicit gains.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.