Upd Prosecutors request arrest warrants for Kakao over alleged stock manipulation during SM Entertainment acquisition

    Quote from AyanEva

    Also, what happens to SM if Kakao execs are found guilty? I'm assuming the final deal hasn't been approved because of the investigation?

    i don't think it matters anymore but kakao would still be sm's owners but they will have to pay a huge fine i guess? not like violating laws is new to kakao because they have been fined several times before.

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    Kakao corporate, Kakao Ent and executives have been turned over to the prosecution for violating the Capital Markets Act. According to the special envoy (of the FSS), CEO Bae and others are accused of conspiring with One Asia Partners, a private equity fund,to block Hybe’s open market purchase by investing 240B to raise SM Ent’s share price above Hybe’s tender offer. Kim Beom-soo, the founder, who was summoned for questioning was not part of those referred for prosecution.


    It is believed that the special envoy will apply for a separate arrest warrant after further investigation of Kim. The special envoy said that the SM Ent price manipulation was carried out with participation of a group of financial and legal experts.A law firm advised Bae and others on how to commit the crime and cover it up…The special envoy made an unusual announcement that there are 18 suspects under investigation. Five have been referred (for prosecution) and the remaining 13 are expected to be sent (to prosecution).

    The remaining group includes SM Ent CEO Jang Cheol-hyuk and four SM Ent executives including Lee Seong-soo (aka Chris Lee, head of A&R), Tak Young-joon (COO), and Jang Jae-ho (CSO) PEF OneAsia Partners was also named as a suspect. Insiders believe the list of suspects may also extend to Korea Zinc who acted as the financier for the fund raised by OneAsia.

    Messy. Hybe is smart to refocus on expansion in Western markets. They shouldn't have tried to buy SM in the first place, IMO, so I'm glad it didn't actually work out and they were able to just sell their stake and leave without too much damage.

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