HYBE Chairman Bang Si-hyuk is under investigation by South Korea’s Financial Supervisory Service (FSS) for alleged misconduct surrounding the company’s 2020 initial public offering (IPO). The investigation centers on claims that Bang personally earned $285 million through profit-sharing agreements with major shareholders prior to the IPO.
In 2020, HYBE—the Korean K-Pop powerhouse formerly Big Hit Entertainment—went public, raising $820 million and solidifying its status as a global powerhouse in the music industry, primarily due to the success of its flagship act, BTS. However, while the IPO was initially a success, many individual investors who purchased shares at the offering price experienced significant losses as the stock price dropped in the weeks following the listing.
According to a report by The Korea Economic Daily, Bang Si-hyuk reportedly earned around 400 billion won ($285 million) from agreements made with three large private equity firms—STIC Investments, Estone Equity Partners, and New Main Equity. These agreements stipulated that Bang would receive 30% of the profits from these firms’ sales of Big Hit shares after the IPO. However, if the company failed to go public on schedule, Bang would have been required to repurchase the shares with interest.
HYBE has acknowledged the existence of these shareholder agreements but strongly denies any wrongdoing. In a statement released on November 29, 2024, the company emphasized that the shareholder agreement was disclosed to the listing underwriters during the IPO process, which was reviewed in accordance with securities laws. The statement insisted that no laws were violated during the IPO.
However, sources close to the investigation revealed that prior to the IPO, one of HYBE’s investors demanded a “put-back option”—a right to sell their shares at a predetermined price. To meet these demands, Bang personally assumed the risk and entered into agreements with the investors, leading to the controversial profit-sharing arrangement.
The FSS is now investigating whether the shareholders’ acquisition of Big Hit shares prior to the IPO violated South Korea’s Capital Markets Act, including whether HYBE withheld any material information in its securities filing. The Korea Exchange has also launched an inquiry into potential violations linked to the IPO documents.
In July, Korea Fair Trade Commission (KFTC) revealed discrepancies in the company’s 2024 state of affairs report. HYBE was found to have omitted certain details, including the existence of a U.S. subsidiary, BEL AIR STRADELLA, LLC, which was registered in December 2023 and fully owned by Bang Si Hyuk. This subsidiary, identified as a real estate company, appears to have been created to facilitate his purchase of a $26.4 million mansion in Bel Air, Los Angeles, in April 2023. The mansion, previously owned by comedian Trevor Noah, raised suspicions due to the timing of the purchase and the subsidiary’s omission from the report, fueling ongoing concerns about HYBE’s transparency amid other company scandals.
The IPO debut of Big Hit (now HYBE) on October 15, 2020, saw shares surge from 135,000 won ($118) to 351,000 won ($308) on its opening day, reflecting strong demand. However, the stock price plummeted 22.3% the following day and continued to decline by 29% over the next two weeks, leaving many retail investors in the red. Some analysts have speculated that the large-scale selloff by private equity investors may have contributed significantly to the stock’s post-IPO slump.
