"Kakao on Founder’s Arrest: Minimizing Gaps Centered on Co-Chair Jeongsin-a" (Comprehensive)

Junsinwi "Will Fully Perform Its Original Role to Enhance Trust"

Kakao founder and management innovation committee chairman Kim Beom-su, who is suspected of 'SM Entertainment price manipulation,' is attending the pre-arrest detention hearing at the Seoul Southern District Court on the 22nd. Photo by Kim Hyun-min kimhyun81@

Regarding the arrest of Kim Beom-su, the founder and Management Innovation Committee Chairman of Kakao, on charges of manipulating SM Entertainment (SM) stock prices, Kakao announced that it will minimize the management vacuum centered around CEO Jeong Sin-ah.

Kakao stated on the 23rd, "Although the current situation is regrettable, we will do our best to minimize the management vacuum centered on Jeong Sin-ah, co-chair of the CA Council." Jeong Sin-ah, CEO of Kakao, serves as co-chair alongside Chairman Kim in the CA Council, the group's control tower.

The external oversight body, Kakao Compliance and Trust Committee (Junshinwi), also released a statement on the same day, saying, "We will steadfastly fulfill our fundamental role of establishing a compliance system and enhancing social trust."

Both Kakao and Junshinwi gave brief statements regarding Chairman Kim's arrest. Since the court's final judgment on Kim's charges is still pending, they appear to be taking a wait-and-see approach. It is reported that Kakao and its affiliates' top executives held a meeting this morning centered on Co-chair Jeong to discuss follow-up measures.

Earlier, Judge Han Jeong-seok of the Seoul Southern District Court, responsible for warrant reviews, issued an arrest warrant for Kim, who is accused of violating the Capital Markets Act, citing concerns over evidence tampering and flight risk.

According to the prosecution, Kim is suspected of manipulating stock prices to set them higher than the public tender offer price of 120,000 KRW by competitor HYBE, in order to obstruct HYBE's public tender during Kakao Entertainment's acquisition of SM last February.

Regarding this case, Kakao is believed to have mobilized approximately 240 billion KRW over four days?February 16-17 and 27-28, 2023?together with the private equity firm One Asia Partners, purchasing SM shares at high prices 553 times. However, the arrest warrant application for Kim reportedly only specifies allegations of price manipulation on February 28.