Kim Beomsoo, the Chairman of the Management Reform Committee and founder of Kakao, who was accused of artificially inflating the stock price of SM Entertainment, was acquitted in the first trial.
On October 21, the 15th Criminal Division of the Seoul Southern District Court (Presiding Judge Yang Hwansung) found Chairman Kim not guilty of violating the Capital Markets Act. Bae Jaehyun, former Chief Investment Officer of Kakao, Kakao Corporation, and Kakao Entertainment, who were indicted on the same charges, were also acquitted.
The court stated, "It is difficult to conclude that acquiring management control of SM was absolutely necessary, and it is also hard to determine that there was a secret agreement to acquire management control, discussions to block the tender offer, or collusion to manipulate the stock price at the Kakao investment table."
The court added, "Given the objective trading patterns such as the proportion of high-priced purchase orders, time intervals, and methods, there is little indication of price manipulation. Furthermore, it does not appear that the purpose of fixing the price at a high level was achieved, so it is difficult to conclude that the intent to fix the price has been proven."
Previously, during the sentencing hearing held in August, prosecutors had requested a 15-year prison sentence and a fine of 500 million won for Chairman Kim. However, the court also found no evidence that the defendants colluded to violate the reporting obligation for holding a large volume of shares.
Chairman Kim was accused of conspiring with private equity fund operator One Asia Partners and others in February 2023, during the acquisition of SM Entertainment, to manipulate the stock price by fixing it higher than the public tender offer by competitor HYBE, thereby obstructing HYBE's tender offer.
Prosecutors also alleged that Chairman Kim and others purchased SM Entertainment shares worth 110 billion won in 363 transactions under the name of One Asia Partners.
Meanwhile, in connection with this case, Mr. Ji, the CEO of One Asia Partners, who was indicted for using the fund for personal purposes (embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes), was found guilty and sentenced to three years in prison with a four-year suspended sentence.
The court explained the sentencing by stating, "This case involved betraying the trust of fund investors and using the collective investment assets entrusted to him for personal purposes. The amount embezzled reached 7.4 billion won, and the damages caused by the breach of trust amounted to 3 billion won. Considering the defendant's position, the circumstances of the crime, and the nature and scale of the damages, the offense is not minor."
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