SEOUL – HYBE Co., Ltd. (KRX: 352820) saw its shares rise 0.7% on Thursday, closing at ₩177,000, after news that police had referred founder and chairman Bang Si-hyuk to prosecutors over allegations of improper gains tied to the company's 2019 initial public offering. The stock traded in a range of ₩175,900 to ₩179,900 during the session.
The referral marks the culmination of a 21-month police investigation into claims that Bang deceived investors ahead of the IPO, securing ₩263.1 billion (approximately $190 million) in undeserved profits. The sum represents roughly 3.5% of HYBE's current market capitalization of ₩7.45 trillion.
Prosecutors had previously rejected two arrest requests for Bang, who remains free and has not been detained. His legal representatives have expressed confidence that the matter will be "fully and transparently resolved through the legal process," according to the Associated Press. The Seoul prosecution office may still call for additional investigation before deciding whether to press formal charges.
This governance issue comes at a time when HYBE's financial performance is strengthening. The entertainment company behind global sensation BTS reported record second-quarter revenue of ₩1.45 trillion, more than double the year-earlier figure. Operating profit surged 159.3% to ₩170.9 billion, while net profit jumped 613% to ₩109.8 billion, though that missed the analyst consensus of ₩121.4 billion by about 9.6%.
Investors appear to be weighing the potential legal fallout against the company's solid operating fundamentals. The stock remains 1.7% below its August 28 close and is down 56% from its 52-week high, reflecting lingering concerns about governance and the broader K-pop industry's dependence on a few key acts.
Analysts note that the investigation focuses on a pre-IPO transaction rather than HYBE's ongoing business activities. However, Bang's continued role as chairman on the company's leadership page keeps the issue in the spotlight. The case introduces a governance discount that could persist until the legal situation is resolved.
If prosecutors decide not to indict, the discount may narrow, potentially providing a boost to the stock. Conversely, an indictment could intensify scrutiny of HYBE's past disclosures and management oversight, weighing on investor sentiment.
Despite the legal overhang, HYBE's record earnings provide a firmer buffer against operational shocks. The company's ability to generate strong revenue growth, driven by BTS's activities and a diversified artist roster, may help sustain investor confidence in the long term.
Market participants will be watching for any developments in the case next week, though no decision date has been set. The outcome will likely influence HYBE's share price trajectory and its standing among institutional investors concerned about corporate governance.