Kim Beom-su, the founder of Kakao Corp., has been indicted on charges of stock manipulation related to his company’s acquisition of K-pop giant SM Entertainment, according to officials on August 8, 2024.
Kim is facing charges under detention for violating the capital markets act, following his formal arrest about two weeks ago. The indictment stems from allegations that Kakao Corp. and its executives engaged in manipulating the stock prices of SM Entertainment during a high-stakes bidding war.
The controversy revolves around Kakao’s acquisition of SM Entertainment, which took place in February 2023. The bid, which saw Kakao outmaneuver rival Hybe (the parent company of BTS’ management agency BigHit), was marked by allegations that SM’s share prices were artificially inflated. Reports suggest that SM shares were driven above 120,000 won ($87) per share, which was the price Hybe publicly offered to buy shares from investors.
Prosecutors allege that Kim and other Kakao executives engaged in stock price manipulation over a four-day period in February 2023 to thwart Hybe’s takeover efforts. Hybe, which had previously acquired a 14.8 percent stake in SM from its founder Lee Su-man, eventually withdrew its bid after SM’s share price surged significantly.
In March 2023, Kakao and its subsidiary Kakao Entertainment successfully became the largest shareholders of SM Entertainment with a 39.87 percent stake.
Kim Beom-su has vehemently denied the allegations, asserting his innocence. During a recent meeting of Kakao affiliates, Kim stated, “I believe the truth will eventually be revealed, as I have never instructed or condoned any illegal actions.”
In addition to Kim, former Kakao CEO Hong Eun-taek and former Kakao Entertainment Corp. chief Kim Sung-soo have also been indicted on related charges, though they are not in detention.
