▲ Hybe Chairman Bang Si-hyuk (Yonhap)

SEOUL, Sept. 3 (Yonhap) -- Bang Si-hyuk, chairman and founder of K-pop powerhouse Hybe, was referred to prosecutors on Thursday on suspicion of deceiving shareholders into selling their shares in Hybe before the company held an initial public offering (IPO), police said.

Bang was referred to the Seoul Southern District Prosecutors Office on suspicion of fraudulent trading under the Capital Market Act after he allegedly deceived the investors in 2019 and went on to pocket 263.1 billion won (US$193.7 million) in illegal profits through the IPO, according to the Seoul Metropolitan Police Agency.

Four other people were also referred to the prosecution on the same charge.

Police said they suspect Bang deceived Hybe shareholders into selling their shares to a private equity fund he helped establish from August to October 2019 by claiming there were no plans for an IPO.

Between October and November that year, he is suspected of telling investors in the fund that an IPO was being planned in order to attract investment.

Police said the illegal profits have been preserved for forfeiture under a court order.

Bang has not been physically detained as the prosecution earlier rejected two consecutive requests by the police for an arrest warrant, citing a lack of material to support the need for his arrest.

A person found guilty of making 5 billion won or more in profits by lying about financial investment products is punishable by life imprisonment or a prison term of at least five years.

The referral came 21 months after the police first launched an internal investigation into the case.

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