Founder Kim Beom-su Acquitted of Stock Price Manipulation
Legal Risks Cleared, But Market Challenges Remain
AI and Content Sectors Face Test for Renewal
Kim Beom-su, founder of Kakao and head of the Future Initiative Center, was acquitted in the first trial 2 years and 8 months after being indicted on charges of manipulating stock prices during the acquisition of SM Entertainment. This verdict provides Kakao with an opportunity to break free from the long-standing cycle of legal risks. Although the appeals process remains, both inside and outside the IT industry, there is analysis that this ruling will serve as a "psychological turning point" for Kakao.
On October 21, the 15th Criminal Division of the Seoul Southern District Court (Chief Judge Yang Hwan-seung) delivered a not guilty verdict to Kim, who was indicted for violating the Capital Markets Act. Kakao had been branded a "high-risk company" due to ongoing investigations and trials. While competitors such as Naver accelerated investments in artificial intelligence and global content, Kakao focused on internal reform and restructuring. In fact, the company implemented drastic measures, reducing the number of subsidiaries to the double digits, but the overall atmosphere within the group was widely seen as subdued.
Recently, during the first major overhaul of KakaoTalk in 15 years, user complaints surged over changes to the Friends tab UI, shaking both brand trust and share prices. Amid these challenges, both Kim and the Kakao corporation were acquitted in the first trial, easing management risks and allowing Kakao to maintain its status as the largest shareholder of KakaoBank. Under the current Internet-Only Bank Act, industrial capital holding more than 10% of a financial company’s shares must not have any record of legal violations such as fines in the past five years. With this acquittal, questions about Kakao’s eligibility have disappeared. As of the end of June this year, Kakao holds a 27.16% stake in KakaoBank, making it the largest shareholder.
The court stated, "The credibility of the prosecution’s key witness statements is insufficient, and there is no proof of intent to manipulate stock prices," acquitting Kim and current and former Kakao executives. Immediately after the verdict, Kim Beom-su released a statement saying, "I sincerely thank the court for thoroughly reviewing the materials over such a long period," and added, "I hope this will serve as an opportunity for Kakao to move away, even slightly, from the shadow of stock price manipulation allegations."
Kakao also issued an official statement, saying, "We are grateful for the court’s wise judgment," and added, "Kakao has long been misunderstood as an immoral company engaged in stock price manipulation, but this not guilty verdict in the first trial confirms that such suspicions were unfounded." The company further emphasized, "During the SM acquisition process, neither founder Kim Beom-su nor any other executives or employees ever discussed or attempted any illegal acts."
Kakao added, "The group faced many difficulties during the 2 years and 8 months of investigation and trial, and it was painful that we could not respond quickly to rapid market changes. We will work even harder to make up for this and fulfill our social responsibilities."
With this acquittal, Kakao is at a turning point for management and image recovery. The resolution of long-standing legal risks is expected to boost investor sentiment and accelerate the normalization of management. Industry observers believe Kakao will now focus on platform stabilization, AI-driven new growth, and governance efficiency to regain its core business competitiveness.
However, underperformance in the content and gaming divisions and user backlash remain as challenges. While the legal risks have been resolved, it is still uncertain whether new business initiatives will lead to a rebound in performance.
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