[Invest&Law] 'SM Price Manipulation' Kakao Trial and Investigation Proceed Simultaneously for 1 Year... Court Criticizes "Prosecution, Incomprehensible"

The trial of Kakao's 'SM stock price manipulation' suspicion case is being delayed due to the prosecution's slow investigation. As the first trial has been ongoing for nearly a year and all the key defendants who were detained have been released, the prosecution still has not decided whether to file additional charges against the parties involved. As the case proceedings have been disrupted, the presiding court strongly reprimanded the prosecution, saying it was "unacceptable."

Seoul Nambu District Court

According to the legal community on the 23rd, during the trial held on the 18th under the Seoul Southern District Court Criminal Division 15 (Chief Judge Yang Hwan-seung) involving former Kakao Chief Investment Officer Bae Jae-hyun and One Asia Partners Chairman Ji Chang-bae, an unusual dispute arose between the court and the prosecution over whether to file additional charges against related parties.

The issue began when the defense team expressed that it was difficult to confirm consent to evidence because the prosecution was still conducting an investigation. The prosecution has continued investigating related parties, including Kim Tae-young, President of One Asia Partners, who was summoned and investigated as an accomplice in the SM stock price manipulation case. Kim is a longtime acquaintance who previously worked at the same company as former CEO Bae and is identified as the link through which Kakao and One Asia Partners conspired to manipulate stock prices. The problem is that it is unknown when Kim and others will be additionally charged, causing delays even in the main trial, which has already been ongoing for a year.

Chief Judge Yang expressed frustration toward the prosecution, saying, "If there is a separate investigation, shouldn't it be separated and charged so that this trial can proceed?" and "How can the trial proceed if the prosecution continues investigating without filing charges while the trial is ongoing?" He also added concerns that "statements submitted after charges against accomplices have been denied evidentiary value in previous rulings," which could negatively affect proving the charges.

Kakao founder and Management Innovation Committee Chairman Kim Beom-su, who is considered the pinnacle of the 'SM stock price manipulation' suspicion, is attending the detention hearing (warrant review) held on July 22 at the Southern District Court in Yangcheon-gu, Seoul. Photo by Kim Hyun-min kimhyun81@

The prosecution began a forced investigation into the stock price manipulation suspicions that arose when Kakao and HYBE competed for shares in SM in February last year, and filed charges against former CEO Bae in November last year. Subsequently, Chairman Ji was charged in April this year, and Kakao Management Innovation Committee Chairman Kim Beom-su was charged sequentially in August. Meanwhile, the presiding court changed, and procedural issues such as consolidating cases of defendants charged late have caused the trial to continue for a year, but the prosecution has yet to complete surrounding investigations. This has caused significant disruptions in the trial, including witnesses refusing to appear in court due to uncertainty about whether they will be charged.

The court repeatedly criticized the prosecution's 'salami slicing' approach to charging, stating, "It cannot be infinitely tolerated just because it is a customary investigation practice." The prosecution explained, "We are putting all available manpower and time into the investigation," and denied intentionally delaying the trial.