HYBE China Debuts in Beijing, Targeting Enhanced Involvement in Local K-pop Sector
HYBE CEO Investigated for Fraud Amidst Business Shifts
HYBE Corporation, a prominent South Korean entertainment and music conglomerate, has been embroiled in a fraud investigation involving its founder and chairman, Bang Si-hyuk. The Financial Supervisory Service (FSS) has gathered evidence suggesting that Bang concealed plans for HYBE's initial public offering (IPO) in 2019, which led several shareholders to sell their stakes, thereby missing out on significant profits following the eventual IPO.
If found guilty, Bang could face severe penalties, including life imprisonment for fraud estimated at around $290 million (400 billion KRW). The Seoul Metropolitan Police Agency has requested a search warrant for HYBE's office as part of the ongoing investigation, which also encompasses allegations of insider trading and financial improprieties.
An employee of HYBE is under investigation for insider trading, having purchased shares of YG Plus using nonpublic information, reportedly earning approximately 240 million won in illicit profits. This is not the first time HYBE or its affiliates have been accused of securities law violations, with past incidents involving employees of a HYBE subsidiary being indicted for similar charges.
The allegations against the CEO and the ongoing investigations have had a noticeable impact on HYBE's stock performance, with prices declining by 4.66%. Moreover, the company's reputation and legal standing could be affected further, as the investigations continue.
During the 64th annual general meeting of the Federation of Korean Industries, Bang Si-hyuk was seen conversing with other attendees in western Seoul. Meanwhile, HYBE has announced several recent developments, such as the intention to sell its entire stake in SM Entertainment to China's Tencent, and the entry into the MMORPG market through a new game, Architect: Land of Exile, by HYBE IM.
The HYBE chairman has also been summoned to testify in the stock manipulation trial of Kakao founder Kim Beom-soo. Detailed updates on these developments will follow as information becomes available.
- The decline in HYBE's stock performance following the fraud investigation of Bang Si-hyuk, its CEO, may also be attributed to concerns about the conglomerate's operational stability within the finance industry.
- In the midst of these investigations, HYBE has recently announced its foray into the technology sector, with plans to sell its stake in SM Entertainment to China's Tencent and the development of an MMORPG game, Architect: Land of Exile, by HYBE IM.
- The entertainment industry, including rivals like YG Plus, may closely monitor the outcomes of the fraud investigation and insider trading allegations against HYBE's affiliates to potentially adjust their own financial and business strategies accordingly.
