Prosecutors Reject Bail Application for BANG SI-HYUK…Demand Further Investigation

The prosecutors have denied the request for a bail warrant against HYBE Chairman BANG SI-HYUK. On the 24th, the Financial and Securities Crime Joint Investigation Team at the Seoul Southern District Prosecutors’ Office rejected the police’s request and ordered additional investigation. The prosecutors stated that “there is insufficient evidence to justify detention at this stage.”

Chairman BANG SI-HYUK is accused of misleading existing investors prior to HYBE’s IPO in 2019 by claiming there were no plans for an initial public offering, thereby inducing them to sell their shares. The investors sold their shares based on this false information, and shortly after HYBE went public, the stock price soared. He is also accused of entering a prior confidential agreement with a private equity fund established by his associates to secure 30% of the profit from subsequent sales after the IPO. Chairman BANG SI-HYUK’s personal illegal gain is estimated at around 190 billion won, with the total amount including related executives reaching over 260 billion won.

Additionally, he is accused of forcing HYBE executives to sell shares held by a special purpose company (SPC) under the private equity fund. Under the Capital Market Act, actions resulting in an illegal gain of 5 billion won or more can carry penalties of life imprisonment or imprisonment of at least five years.

The police submitted a bail warrant application on the 21st after conducting investigations for approximately 1 year and 4 months. However, the prosecutors determined that the necessity of detention at the current stage of the investigation has not been sufficiently proven. They assessed that there is little risk of flight, as Chairman BANG SI-HYUK maintains a residence in South Korea and has consistently complied with summonses throughout the investigation. Nevertheless, the possibility of evidence destruction remains a concern. He replaced both of his mobile phones just before the investigation began, and HYBE changed its internal messaging program in October 2020, shortly after the IPO, which has made it difficult to access key communication records from that period.

The police may conduct further investigations in response to the prosecutors’ request for additional evidence, which could open the door to submitting another bail warrant application.