On July 24, 2025, Korea JoongAng Daily reported that officers from Seoul’s Securities and Futures Commission raided HYBE’s main office in Yongsan-gu in central Seoul around 9 am. It is part of a proceeding investigation into allegations against HYBE chairman Bang Si-hyuk of violating the Capital Markets Act over suspicious stock sales made back in 2019.According to authorities, Bang had informed early investors that there were no intentions to list HYBE publicly. However, the company soon moved forward with an IPO, and Bang allegedly earned hundreds of billions of won in gains. Investigators suspect this could amount to investor deception.Police are also looking into his sale of shares to a paper company created by private equity firms. One of the fund’s three listed directors reportedly has ties to Bang, raising concerns about insider deals. A warrant to enter HYBE HQ was filed earlier on July 17. But due to shifts in jurisdiction, from prosecutors to the Financial Supervisory Service’s special police unit on July 21, the process stalled briefly.HYBE Bang Si-hyuk’s alleged IPO misconduct explainedAuthorities believe Bang Si-hyuk played a key role in misleading early investors. Reports claim he downplayed HYBE’s IPO prospects in 2019, encouraging shareholders to sell while he and others cashed in, raking in around 400 billion won, or nearly $288 million.“The suspects circumvented the lock-up period meant to prevent major shareholders from offloading shares immediately after listing, and dumped their shares on the market for profit. The nature of this violation is particularly serious. The stock price plunged afterward, causing significant harm to ordinary retail investors," a financial authority official said via local media (The Korea Herald reported).Prosecutors say Bang allegedly signed a private deal with a major equity fund that held a chunk of HYBE stock. He allegedly agreed to share 30% of profits from his share sale — another move that padded his returns.Under Korea’s market laws, anyone making or dodging more than 5 billion won through illegal trades could be looking at five years to life behind bars. Sending a case to prosecutors is the harshest step regulators can take before court proceedings begin.Bang was given a shot to appear in person and clarify his position during the Financial Supervisory Service’s inquiry. But he reportedly skipped the session, declining to offer a direct explanation. HYBE responded publicly on Thursday through The Korea Herald, stating,“It is unfortunate that the financial regulators did not accept the major shareholder’s explanation during the Financial Supervisory Service’s investigation, in which he made clear he did not pursue personal gains based on the company’s IPO.”The South Korean multinational conglomerate added,“Nevertheless, we respect the decision and will do our utmost in the upcoming investigation to actively address the allegations and recover the trust of the market and our stakeholders.”Meanwhile, in response to such backdoor dealings, the Korea Exchange tightened IPO screening rules last year. Underwriters are now expected to dig deeper into shareholder contracts and flag anything that could harm public investors.This is the first major regulatory clampdown under President Lee Jae-myung’s administration to directly target a major corporate head.