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Prosecutors summoned Kim Beom-soo, the founder of tech giant Kakao Corp., on July 9, 2024, over stock manipulation allegations related to K-pop megacorp SM Entertainment last year./ Source: Yonhap News |
AsiaToday reporter Seol So-young
Kim Beom-soo, the founder of Kakao and Chairman of the Management Innovation Committee, was summoned by prosecutors on Wednesday for his suspected involvement in stock price manipulation during the acquisition process of K-pop powerhouse SM Entertainment last year.
The Financial Investigation Division 2 of the Seoul Southern District Prosecutors’ Office called in Kim earlier in the day and said it was investigating Kim for alleged violations of the Financial Investment Services and Capital Markets Act. Kim appeared before the prosecution for the first time in eight months after the Financial Supervisory Service transferred the case to the prosecution and suggested the law enforcement agency indict Kim. The tech mogul appeared behind closed doors and away from reporters.
The investigation focuses on suspicions that Kakao and its executives manipulated SM Entertainment stock prices amid a bidding war with Hybe, the parent company of K-pop superband BTS’ management agency BigHit. SM Entertainment shares were allegedly driven above 120,000 won (US$86.71) per share through alleged rigging – the fixed price at which Hybe was buying shares from investors.
Prosecutors suspect Kakao of purchasing 240 billion won (US$73 million) worth of SM shares, purchasing them at prices higher than Hybe’s tender offer on 553 occasions in mid-to-late February last year to undermine a tender offer from Hybe during the takeover battle. The mobile messenger platformer is also suspected of failing to report its large stock holdings to financial authorities.
Prosecutors earlier indicted Kakao’s chief investment officer Bae Jae-hyun and the company itself on stock manipulation charges, along with the chief of a private equity fund involved in the case. Bae expressed his position that it was a free competition in the capital market and that there was no illegality.
These indictments followed the Financial Supervisory Service’s referral of Kim, Bae and several other Kakao executives to the prosecution for further investigation last year.
In Marhc last year, Kakao and its subsidiary Kakao Entertainment took control of SM Entertainment after acquiring a 39.87 percent stake in the agency.
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