Korean Regulators Investigating BTS Mastermind Bang Si-hyuk Over Alleged Big Hit Entertainment IPO Fraud

Photo Credit: Bang Si-hyuk for Metropolitan City of Busan

Hybe chairman Bang Si-hyuk, the mastermind behind BTS, is under investigation by South Korea’s financial watchdog for allegedly fraudulent trading.

South Korean outlets report that the country’s Financial Supervisory Service has been looking into claims that Hybe chairman Bang Si-hyuk misled investors during Hybe’s pre-IPO phase in 2019. Investigators have reportedly found evidence that Bang privately informed institutional investors that a public listing was unlikely, even while taking steps to move forward with an IPO.

At the time, Bang allegedly entered into a profit-sharing agreement with private equity funds established by his acquaintances, and ultimately pocketed around 400 billion won ($289.7 million) after Hybe’s successful stock debut in 2020. That arrangement was never disclosed in Hybe’s official filings, which could spell a violation of Korea’s capital market law.

Neither Hybe nor South Korea’s financial watchdog have confirmed details of the investigation, but they have neither denied its existence. That further fuels speculation that formal legal proceedings are forthcoming. The Financial Supervisory Service (FSS) is reportedly considering referring the case to prosecutors via a fast-track process. Further, a separate police investigation is said to be underway.

Understandably, fans are concerned that the controversy may impact BTS’ comeback as a full group, following its members’ mandatory military service. The seven-member ensemble is on track to reunite perhaps later this year, as all members will have completed their mandatory service by June 21.

An official comeback date hasn’t been confirmed, but Hybe has repeatedly stated that new BTS content and performances are in the works. In March, Hybe CEO Park Ji-won told shareholders that the company was negotiating with top-tier songwriters and producers over BTS members’ need to “regroup creatively” after completing their service.

Fortunately, entertainment industry executives close to the matter say the financial scandal involving Bang is unlikely to affect BTS’ activities. “The issue centers on Bang Si-hyuk’s personal gains and doesn’t directly involve BTS,” an official said on Thursday. “Hybe operates under a multi-label system, and BTS is more than capable of making a comeback independently of Bang.”

View the full article