SEOUL — Prosecutors have officially requested an arrest warrant for Kim Beom-su, founder of Kakao Corp., concerning accusations of stock price manipulation during Kakao's acquisition of SM Entertainment, according to officials on Wednesday.
According to Yonhap News Agency, the request comes after a thorough investigation into Kim's activities surrounding the manipulation of stock prices during a high-profile bidding war against Hybe, the agency behind K-pop group BTS. Allegations suggest that Kakao and its executives, under Kim's leadership, engaged in artificially inflating the price of SM shares to thwart Hybe’s attempt to take over SM Entertainment. Specifically, Hybe aimed to buy shares from smaller shareholders at a fixed price of 120,000 won (US$86.9) per share, a price point Kakao is accused of exceeding on multiple occasions to disrupt the bid.
The investigation details that Kakao purchased 240 billion won (US$173.8 million) worth of SM shares at inflated prices across 553 transactions to deter Hybe's acquisition efforts. Following these events, Kakao and Kakao Entertainment secured a 39.87 percent controlling stake in SM Entertainment in March of the previous year. During a recent interrogation, Kim denied any direct involvement in the specific details of the share purchases.
The Seoul Southern District Court is scheduled to review the warrant request next Monday. Meanwhile, Kakao's legal team has voiced significant concerns over the allegations, staunchly denying any illicit actions by Kim.
In addition to the current charges, the prosecutors are also investigating other incidents involving Kakao affiliates, which include potential price manipulation during a 2020 acquisition and embezzlement related to Kakao's blockchain operations.