Prosecutors have requested a 15-year prison sentence for Kim Beomsoo, founder of Kakao, who has been indicted on charges of artificially inflating the stock price of SM Entertainment.
On August 29, during the final hearing on charges of violating the Capital Markets Act at the 15th Criminal Division of the Seoul Southern District Court (Presiding Judge Yang Hwansung), prosecutors asked the court to sentence Kim to 15 years in prison and impose a fine of 500 million won.
Kim was indicted in August last year on charges of conspiring with private equity fund One Asia Partners and others to manipulate the stock price of SM Entertainment during the acquisition process on February 16-17 and 27-28, 2023. He is accused of fixing the share price above the public tender offer price (120,000 won) to obstruct a public tender offer by rival company HYBE. Prosecutors also believe that Kim and others purchased SM Entertainment shares worth 110 billion won in 363 transactions under the name of One Asia Partners.
Kim was detained on July 23, 2024, but was released on bail on October 31 of the same year and is currently standing trial without detention.
In addition, prosecutors have requested sentences for others indicted as co-conspirators: 12 years in prison and a 500 million won fine for Bae Jaehyun, former Chief Investment Officer of Kakao; 10 years in prison and a 500 million won fine for Kim Seongsu, former CEO of Kakao Entertainment; 9 years in prison and a 500 million won fine for Kang Hojung, former Head of Investment Strategy at Kakao; 7 years in prison and a 500 million won fine for Hong Euntaek, former CEO of Kakao; 10 years in prison and a 500 million won fine for Ji Changbae, Chairman of One Asia Partners; and 7 years in prison and a 500 million won fine for Kim Taeyoung, President of One Asia Partners. Prosecutors have also sought a fine of 500 million won each for Kakao, Kakao Entertainment, and One Asia Partners.
Prosecutors stated, "The defendant, as the head of the Kakao Group and the ultimate decision-maker, was informed that there were legitimate methods of competition but persistently opposed them and approved the manipulation of SM Entertainment's stock price through on-market accumulation. As the ultimate beneficiary of the criminal proceeds, his culpability is extremely high."
In the final defense, the defendant's attorney argued that the case stemmed from a fundamental misunderstanding of capital market regulations. The attorney claimed that the prosecution's view that on-market purchases of less than 5% during the public tender offer period were illegal lacks legal basis, and insisted that the defendants followed proper procedures and were indicted without justification.
Typically, sentencing takes place about a month after the final hearing, but given the significance of this case, there is speculation that the court may take longer to reach a verdict.
Meanwhile, on the same day, the defendant Kim was also questioned in court. Prosecutors believe that, immediately after HYBE announced its public tender offer on February 10, 2023, there was a discussion at the Kakao Investment Review Committee that "it is possible to block [the acquisition] through market purchases." In response, Kim testified, "Former Chief Investment Officer Bae Jaehyun raised the agenda, but I clearly expressed my opposition," adding, "I was against acquiring SM Entertainment from the beginning."
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