Kim Beom-su, chairman of Kakao's Management Innovation Committee, who is accused of manipulating SM Entertainment's stock price, has been indicted while in custody.
On the 8th, the Financial Investigation Division 2 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Jang Dae-gyu) indicted Chairman Kim on charges of violating the Capital Markets Act. Former Kakao CEO Hong Eun-taek, former Kakao Entertainment CEO Kim Sung-soo, and Kakao Investment Strategy Director Kang Ho-jung were indicted without detention.
Kim Beom-su, Chairman of Kakao Management Innovation Committee (center) / Photo by Kim Hyun-min kimhyun81@
According to the prosecution, Chairman Kim is accused of manipulating and accumulating SM Entertainment stocks through 363 transactions by purchasing approximately 110 billion KRW worth of SM Entertainment shares at high prices and placing orders to exhaust supply on February 16-17 and 27 last year, when the acquisition competition with HYBE was in full swing, to block HYBE's public tender offer. He is also accused of manipulating and accumulating stocks through 190 transactions on February 28 of the same year by injecting 130 billion KRW in funds under the names of Kakao and Kakao Entertainment using the same method.
Furthermore, during this process, the SM shares purchased by Kakao amounted to a total of 8.16%, exceeding the 5% threshold for large shareholding reporting, but they are also accused of hiding and failing to report their holdings. The prosecution believes that the reason they did not report the shares was to conceal the purpose of acquiring SM from the court, which was necessary to win the injunction lawsuit related to the subscription of new shares and convertible bonds with SM and acquire SM shares at a low price. Additionally, the prosecution explained that they planned and executed the stock price manipulation crime by mobilizing funds from One Asia Partners within the unreported range below 5%.
A representative from the Seoul Southern District Prosecutors' Office stated, "Kakao mobilized affiliates, issued statements to the market to boost stock prices, and used corporate funds for stock price manipulation, committing the crime in a planned and organized manner. By uncovering and prosecuting the stock price manipulation crime committed for the profit of a leading domestic IT conglomerate, we have protected the trust in the capital market, which was damaged by the public tender offer system rendered ineffective by this crime and abnormal stock price fluctuations."
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