Young Poong: "Knew About SM Stock Manipulation Before Fund Investment"... Korea Zinc: "Distortion of Facts" (Comprehensive)

Evidence Found in Internal Emails Disclosed in Court
Young Poong: "This Constitutes Collusion or Abetment in Price Manipulation"
Korea Zinc: "Dismisses Claims, Citing Purely Financial Investment Purpose"

Young Poong, the largest shareholder of Korea Zinc, has raised suspicions of collusion involving Choi Yunbeom, chairman of Korea Zinc, in connection with the SM Entertainment stock manipulation case. Young Poong claims that there is sufficient evidence indicating that Choi was aware, even before the fund was established, that the investment capital would be used to purchase SM Entertainment shares.

On September 5, Young Poong stated, "There is evidence that Chairman Choi Yunbeom and the Korea Zinc management were aware in advance that the investment capital for the Havana No. 1 fund would be used to purchase SM Entertainment shares," adding, "This contradicts Korea Zinc's claim that it was merely an investor in the fund and had no involvement in the fund's investment decisions."

Choi Yunbeom, chairman of Korea Zinc, is drinking water at a Korea Zinc press conference held on the 13th at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul. On the same day, Chairman Choi stated, "I will step down from the position of chairman of the board as soon as possible, and an outside director will take over as chairman of the Korea Zinc board." Photo by Kim Hyunmin

Young Poong pointed out that evidence of Korea Zinc's collusion in manipulating SM Entertainment's stock price was found in internal emails disclosed in court. They argue that if Korea Zinc proceeded with the investment and approval despite recognizing the flow of funds used to artificially influence the stock price, this constitutes 'collusion' or 'abetment.'

Young Poong stated, "Chairman Choi Yunbeom's side has argued that the SM Entertainment stock price manipulation was a legitimate fund investment and that there was no violation of the law, but this is not true," adding, "It must be seen that Korea Zinc made the investment with prior knowledge of the stock price manipulation, and since the funds were actually used for price manipulation, there is a possibility of violating the two relevant provisions of the Capital Markets Act."

Invested 100 billion won in a middle school classmate's fund... Dissolved after one year

Previously, in February 2023, Korea Zinc solely invested about 100 billion won in the Havana No. 1 private equity fund managed by One Asia Partners, which was reportedly involved in the SM Entertainment stock manipulation. One Asia Partners was a private equity firm with no notable track record, and its CEO, Ji Changbae, was a middle school classmate of Chairman Choi Yunbeom.

The funds invested by Korea Zinc starting from February 15, 2023, were immediately used for large-scale purchases of SM Entertainment shares on February 16 and 17. According to testimony from a Kakao Entertainment executive, at a meeting in March 2023-right after Kakao blocked HYBE's tender offer for SM Entertainment-Chairman Choi Yunbeom congratulated Kim Beomsoo, Chairman of Kakao, saying, "Former Kakao Chief Investment Officer Bae Jaehyun did an excellent job and achieved great results, so congratulations," and added, "Let's continue to cooperate well with each other, even if only indirectly."

Later, in April of the same year, Korea Zinc received a cash distribution of 52 billion won from the Havana No. 1 fund. In December, the company reportedly received an in-kind distribution of about 440,000 SM Entertainment shares, valued at approximately 40 billion won. The fund was dissolved in January 2024 and liquidated in March. Young Poong stated, "Korea Zinc recovered half of its investment in just two months and received a direct in-kind distribution of SM Entertainment shares after early liquidation of the fund within a year and a half," adding, "This is clear evidence that Korea Zinc was the source of the key funds used in the SM Entertainment stock manipulation."

Korea Zinc: "It was a financial investment only... Distortion of facts"

Korea Zinc dismissed Young Poong's claims, stating, "We are completely unrelated to the suspicions surrounding the SM Entertainment case." The company added, "Young Poong is distorting the meaning of emails that actually prove our non-involvement during the trial process," and explained, "The email in question did not mention any intention to block the tender offer." They further clarified, "The statement 'We could sell SM Entertainment shares to HYBE at 120,000 won' was simply referring to a possible exit."

Korea Zinc emphasized, "This investment was made for financial purposes only," and "It clearly shows there was no intention to artificially inflate SM Entertainment's stock price to block HYBE's tender offer." The company also stated, "We deeply regret that Young Poong continues to make distorted claims that are contrary to the facts," and added, "As the nation's sole supplier of strategic minerals, we will remain committed to our core role of contributing to the national interest and strengthening the Korea-U.S. economic security alliance."