South Korean prosecutors are seeking an arrest warrant for billionaire Kakao Corp. founder Brian Kim Beom-Su, a surprise twist in their ongoing investigation into alleged stock market manipulation.
The Seoul Southern District prosecutors’ office is seeking to detain the celebrated entrepreneur after conducting a probe into alleged price-rigging that took place during a bidding war over SM Entertainment Co. in 2023. A spokesperson for the office confirmed it has asked courts to issue an arrest warrant over charges related to the capital markets law, but declined to comment further.
The court will determine whether to issue the warrant after a hearing.
Kakao’s spokesperson denied the allegation and said no illegal activities had transpired during the acquisition of SM, adding that a further explanation would be provided during the court hearing.
The company’s stock fell as much as 0.9% to 40,550 won ($29).
Kakao, the Korean internet leader Kim created, won a controlling stake in SM after an intense bidding battle with Hybe Co., the label behind boyband sensation BTS. Financial regulators have accused executives at Kakao and Kakao Entertainment Corp. of buying 240 billion won in shares of SM in an attempt to disrupt Hybe’s offer.
Source: https://time.com/6999461/korea…-sm-investigation-arrest/
The Seoul Southern District Prosecutor’s Office accuses Kim of violating the Financial Investment Services and Capital Markets Act and filed a request for the warrant on Wednesday.
Kim’s attorney, from Sejong Law Firm, responded by flatly denying the allegation, saying that the prosecutors' decision is "regrettable."
“Kim Beom-su, chairman of Kakao’s Corporate Alignment Council, did not instruct nor condone any illegal activities regarding the purchase of SM Entertainment shares last year,” the attorney said in a press statement. “The transaction was a legitimate market purchase aimed at securing shares for business collaboration purchases. Nevertheless, we regret that this matter has progressed to a stage where the prosecution has filed for an arrest warrant. We will diligently explain and clarify these points during the warrant review process.”
The move comes just eight days after the Kakao founder was summoned by prosecutors for further investigation into the allegations.
Kim endured more than 20 hours of intense interrogation from July 9 into the early morning of July 10, during which he reportedly denied most of the allegations.
Kim is suspected of involvement in the manipulation of SM Entertainment shares, colluding with the private equity fund management company OneAsia Partners during the bidding war that pit the messenger giant against another K-pop powerhouse, HYBE, for the acquisition.
The two parties are speculated to have artificially injected 240 billion won ($173.8 million) into the market to drive SM shares above 120,000 won between Feb. 16 and 17, and Feb. 27 and 28 in 2023, thereby obstructing HYBE’s attempt to acquire the stock.
Kakao ultimately came out as the winner in the takeover, allowing it and subsidiary Kakao Entertainment to jointly secure 39.87 percent stake in SM Entertainment.
The probe has been ongoing since February of last year, sparked by a report by HYBE requesting Korea’s financial regulator to investigate Kakao’s “abnormal” purchase of shares during the transaction. The prosecution and the Financial Supervisory Service raided Kim's office and Kakao’s Pangyo headquarters multiple times last year.
Kakao’s former chief investment officer, Bae Jae-hyun, and the CEO of OneAsia Partners, known by his surname Ji, are standing trial over the same allegations.
For Kim, prosecutors are probing whether he was also directly or indirectly involved, instructed, approved or turned a blind eye to the misconduct.
The warrant review is scheduled for 2 p.m. on Monday at the Seoul Southern District Court in western Seoul.
Source: https://koreajoongangdaily.joi…tock-manipulation/2092172
