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On June 24, 2024, the Fair Trade Commission (FTC) opened an inquiry against HYBE and Chairman Bang Si-hyuk for submitting falsified documents. The entertainment company was classified as a conglomerate (a business group subject to disclosure) in May 2024 and became the first entertainment agency to have assets worth over 5.25 trillion won (over $3.78 billion).
On June 24, NME reported that the Fair Trade Commission sent authorities to the HYBE's headquarters in Gangnam to conduct an on-site investigation. Established by Bang Si-hyuk, aka Hitman Bang, the company is facing allegations of providing inaccurate or counterfeit information in the "data for designation of conglomerates" that was filed to the FTC.
Under South Korean law, conglomerates are considered "large corporations" if their assets total 5 trillion won or more. Among the list provided by the Fair Trade Commission (FTC), HYBE was one of the 88 companies that were designated as conglomerates in South Korea.
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Additionally, these conglomerates are obliged to reveal information publicly on their ownership structure, important nonaffiliates, and details of their inter-affiliate transactions.
Fair Trade Commission verifying documents provided by HYBE regarding its holding companies
Furthermore, the FTC suspected that specified data submitted of records about executives, affiliates, and companies held by the relatives of Bang Si-hyuk were forged or inaccurate. As per law, the group of firms operating under HYBE has to disclose information about the present status of its shareholders and significant management issues involving affiliates and HYBE.
For the unversed, legal requirements for publicly traded corporations oblige them to disclose their financial data, providing access to information about the company to analysts, investors, shareholders, and the media. This data facilitates the valuation of the firm and enables businesses to keep shareholders and prospective investors informed about their financial performance and future plans.
However, it is important to note that an inquiry by the FTC is a simple method of verifying company documents each year. A source told YTN News that while they are doing cross-checks, they are unable to substantiate any claims at this time.
"We cannot confirm the matter under investigation. If there is any violation of the law, we will take strict action." as reported by YTN News.
Bang Si-hyuk's company is obliged to make documents and information publicly accessible as it is a publicly traded company. However, the FTC's suspicion against the company for omitting or falsely showing businesses held by the founder’s relatives has put its reputation under scrutiny.
On June 24, 2024, HYBE's share stands at 1,98,100 KRW, which is a 1,900 (0.95%) decline. In other recent news, on June 11, before BTS Jin's military discharge, the company share price saw a growth of 2.79%.
This was a positive sign and created an uproar among fans as they lauded Jin's market influence, which improved the company's share market value, which saw a downward trend in its stock due to its public feud with ADOR CEO Min Hee-jin.
