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Korean Exchange Admits 'Review Loophole,' Decides Not to Sanction HYBE
🕑 Added 2024-12-02 09:22:45 +0000 UTCThe Korea Exchange has acknowledged a "loophole" in its internal listing review process, particularly regarding the failure to report shareholder agreements during HYBE's listing process. Despite this, the exchange has decided not to impose sanctions on HYBE, opting instead to strengthen its review system.
On December 2, sources from the financial investment industry revealed that HYBE would not face a substantive review for delisting, despite the omission of critical information in its listing documents. Under current listing regulations, a substantive review is required when the omission of significant investor protection information is discovered during the listing review process.
After investigating the case, the Korea Exchange determined that the issue did not warrant a substantive review. An official stated, “While it is regrettable that HYBE and its lead manager did not disclose the contract between Chairman Bang Si-hyuk and the private equity fund (PEF) for sharing HYBE's investment profits, it does not constitute a clear violation of listing regulations.”
The official further explained, “During HYBE's review process, the exchange should have identified suspicious circumstances and requested disclosure of the contract. Unfortunately, this was not done, but it does not meet the threshold for regulatory action.”
The corporate due diligence checklist mandates the disclosure of shareholder contracts in cases where investments have been received, but this typically applies to contracts involving new stocks. In this instance, Chairman Bang’s agreement with Easton PE pertained to the acquisition of old stocks, not new ones.
An exchange representative stated, “We plan to enhance and clarify the checklist following this incident, as the ambiguity in its current form has been revealed.”
While HYBE escapes sanctions, the Korea Exchange’s acknowledgment of its review system’s shortcomings has prompted efforts to improve its procedures, aiming to prevent similar oversights in the future.
source: https://n.news.naver.com/article/015/0005064326?sid=101
Comments
Arlene
Attacking HYBE because of clean hands doctrine. Nice try.
Jessica Moyer
According to HYBE they had everything reviewed by 4 different law firms during the listing process, so they did their due diligence. If the Laws allow what this article is calling a ‘loophole’ well they need to change the law etc.
