Kakao founder faces charges of stock manipulation in K-pop agency acquisition
Kim Beom-su, the founder of South Korean tech giant Kakao, has been arrested as he faces charges of stock price manipulation linked to the acquisition of K-pop powerhouse SM Entertainment last year, according to prosecutors.
The Seoul Southern District Court has issued an arrest warrant for Kim Beom-su, following a hearing conducted weeks after prosecutors interrogated him regarding his suspected role in manipulating shares of K-pop powerhouse SM Entertainment.
According to reports from Yonhap news agency, the court justified its decision based on concerns about the risks of Kim fleeing and potentially tampering with evidence.
These developments mark a significant turn in the ongoing investigation into financial irregularities surrounding Kakao’s acquisition of SM Entertainment shares.
What is the case against Kim Beom-su?
- The case centers on suspicions that the mobile platform-to-entertainment conglomerate and its executives manipulated SM stock prices during a bidding war it won in February last year against Hybe, the parent company of K-pop superband BTS‘ management agency BigHit, over the takeover of SM.
- It is suspected that SM Entertainment’s shares were artificially inflated to over 120,000 won ($86) per share through these manipulative practices. This inflated price reportedly aligned with the fixed rate at which Hybe was publicly purchasing shares from investors.
- SM shares were allegedly driven above 120,000 won ($86) per share through alleged rigging, the fixed price at which Hybe was publicly buying shares from investors.
Prosecutors suspect Kakao of purchasing 240 billion won worth of SM shares at prices above Hybe’s tender offer price on 553 occasions in February last year to undermine Hybe’s takeover bid for SM.
Hybe had acquired a 14.8 percent stake in SM from its founder Lee Su-man and offered to buy up SM shares from small shareholders at 120,000 won per share. But it later withdrew its takeover bid after SM shares significantly jumped.
For all the latest updates, download PGurus App.
