Asian Junkie Asian pop. Without discretion.
Now that I’ve returned for a mini-vacation of sorts, of course the place I’m headed is right back to the legal mines, where Bang Si Hyuk’s everlasting fraud case has finally seen him referred to prosecution after 21 long months and also after they had previously rejected it (twice).
As you may know by now, HYBE’s chairman and other executives are charged with fraudulent unfair trading via misleading shareholders into selling stakes during the company’s IPO and benefitting to the tune of ~$195 million. Authorities describe it as “an organized and premeditated financial and securities crime involving specialists from various fields of the capital market.”
“Police said they searched HYBE and private equity funds and confirmed that Bang and others told existing shareholders there was no listing plan and urged them to sell their stakes to a private equity fund, even though preparations for a listing were under way. The private equity fund, meanwhile, recruited investors by guaranteeing a confirmed listing and returns in order to buy out the existing shareholders’ stakes.
Police concluded that Bang and the others gained about 263.1 billion won in illicit profits through the scheme. The figure was calculated from the proceeds of on-market sales after deducting distributions to limited partners, loan repayments, transaction taxes and fees. Police applied for a pre-indictment preservation order for forfeiture and obtained a court decision covering the full amount.“
The court has also ruled to preserve assets equivalent to the alleged gains ahead of potential prosecution.
Police also say that Bang was the one who planned the scheme, “After A [Bang] ordered a listing as a way of raising funds for the company, they told existing shareholders from August to October 2019 that there was no listing plan while preparing for the listing behind the scenes,” a police official said. “Based on all the evidence collected, we established that A was substantively involved on both sides, at company Gap [HYBE] and at the private equity fund.“
They also shared that was why they charged him with fraudulent unfair trading rather than fraud as the goal was the listing gains and it involved the fairness of the market, “Fraud is an individual crime, while fraudulent unfair trading infringes on a social legal interest. … Police viewed the series of acts by Bang and the others as a single whole and applied the charge of fraudulent unfair trading.“
Authorities also noted that the penalties for fraud are lighter than fraudulent unfair trading.
In addition to Bang, police obtained an arrest warrant for former HYBE Chief Investment Officer Kim Joong Dong, who left the country and is now on wanted lists with a request to Interpol for a red notice. Police said they requested through his lawyer for him to appear in Korea and he said he would not do so.
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I always figured this was coming at some point, because authorities just couldn’t leave it at “oh well we tried” after making all this noise, though I’m still skeptical about both their case and whether any real punishment will be doled out even if he is determined to be guilty.
Part of that cynicism is general faith that rich people tend to get the most favorable outcome possible, but also because authorities don’t seem like they can get the ex-CIO to cooperate, and if he really did mastermind the plan (as reported) getting to him would seem imperative to getting to the bottom of this.
