SEOUL — Kakao Corp., the entity behind South Korea's leading mobile messenger service KakaoTalk, announced on Monday that it will focus on bolstering compliance and internal controls in the face of stock manipulation allegations involving its executives.
According to Yonhap News Agency, an executive meeting was convened involving the company's founder, Kim Beom-su, CEO Hong Eun-taek, and other senior officials. The executives collectively acknowledged the company is in an "emergency" situation and expressed a commitment to establishing a management system that aligns with "social standards," as stated by Kim Beom-su during the meeting.
Kakao Corp. has come under scrutiny for allegedly manipulating the stock price of K-pop agency SM Entertainment Co. The allegations suggest that Kakao invested around 240 billion won (US$177.6 million) to outbid Hybe Co., the organization behind K-pop sensation BTS, in a contest for SM Entertainment shares last February. As a result, Kakao and its subsidiary, Kakao Entertainment, acquired a nearly controlling 40% stake in SM Entertainment, which manages top-tier K-pop artists such as NCT and EXO.
The Financial Supervisory Service (FSS), South Korea's financial regulatory authority, has referred Kakao Corp., Kakao Entertainment, and three of the company's senior executives to prosecutors over the allegations. Among these executives is Chief Investment Officer Bae Jae-hyun, who was arrested earlier this month. While Kim Beom-su is suspected of being involved in the alleged misconduct, the FSS has not yet referred him to the prosecution.