South Korean prosecutors said they had arrested Kim Bum-soo, the billionaire founder of tech giant Kakao, on suspicion of stock price manipulation in a case linked to the company’s acquisition of K-pop agency SM Entertainment last year.
According to the Associated Press, “Kim faces charges that he conspired with the managers of a private equity fund to orchestrate and approve a scheme to artificially inflate SM Entertainment’s stock price and block Hyve’s acquisition of SM Entertainment.”
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Hybe Corp., the leading agency behind BTS Attempted to acquire 15% of SM Entertainment Estranged founder Lee Soo-man had been trying to sell, but resistance from SM Entertainment’s management and a higher bid from Kakao and its allies thwarted the acquisition of Hive.
Kim, also known as Brian Kim, denies the charges, according to the Seoul Prosecutors’ Office, which said another Kakao executive and the head of a stock fund had already been indicted in the same case.
Prosecutors said they sought the warrant due to concerns that Kim might flee or destroy evidence. Prosecutors have 20 days from Tuesday’s arrest to indict him.
Kim has not commented since his arrest, but after a staff meeting last week, Kakao released a statement from him: “The allegations are untrue. I have never directed or condoned any illegal activity,” the company said.
SM is the second largest music talent agency in South Korea and represents music artists such as Super M, Aespa, BoA, Red Velvet, Girls’ Generation, HOT, EXO, Super Junior, SHINee, and NCT DREAM.
Hive Giving up on acquiring management rights for SM Entertainment in March 2023After a brief and bitter skirmish, the company continued to complain about the structure of the Kakao acquisition. Prosecutors search SM Entertainment offices They are looking for evidence of stock price manipulation.
Financial industry sources said Kakao, which owns South Korea’s dominant messaging platform KakaoTalk and a gaming business, could take a major hit if Kim is indicted or subsequently convicted. They suggested the case could jeopardize the company’s banking-related business, artificial intelligence expansion and overseas expansion.
After falling on Tuesday, shares rebounded partially early on Wednesday, with Kakao shares trading at 39,650 won, valuing the group at 17.5 trillion won ($12.6 billion). Kim reportedly holds a 24 percent stake.
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