Six co-defendants face prison; Kakao entities fined 500M won over SM stock manipulation
Prosecutors requested 15 years in prison and a fine of 500 million won ($360,000) for Kim Beom-su, the founder of Kakao Corp. on Friday, in the final hearing of a criminal trial over suspected stock manipulation linked to the South Korean tech giant’s takeover of SM Entertainment in 2023.
The prosecution had previously charged Kim with violating the Capital Markets Act, accusing him of inflating SM Entertainment’s share price in a bid to acquire a controlling stake in the K-pop agency during a competitive bidding war against Hybe in February 2023.
Prosecutors said Kim, as head of the group, directed the takeover of SM Entertainment while concealing his intentions. They argued Kim bears the greatest responsibility in the case, accusing him of giving the go-ahead for the stock manipulation through market purchases to block rival Hybe’s tender offer.
“Kim approved the manipulation of SM Entertainment’s stock price through on-market purchases in order to conceal Kakao Corp.’s intention to acquire SM and block Hybe’s tender offer, and therefore bears the greatest responsibility,” prosecutors laid out.
According to the prosecutors, Kim was the final beneficiary of profits from the crime, making him more culpable than the other defendants.
Prison sentences were also sought for six other defendants, who were indicted alongside Kim, while a 500 million won fine was requested for Kakao Corp. and its content affiliate Kakao Entertainment.
Kim has been accused of artificially inflating SM Entertainment’s share price above the Hybe offer of 120,000 won per share — the fixed price at which Hybe was purchasing shares from investors — by funneling in some 240 billion won and purchasing shares at higher prices.
