Kakao founder to be referred to prosecution for suspected stock rigging

▲ Kakao founder Kim Beom-su (C) appears for questioning at the headquarters of the Financial Supervisory Service in this file photo taken Oct. 23, 2023. (Yonhap)

Kakao chief-investigation

Kakao founder to be referred to prosecution for suspected stock rigging

SEOUL, Nov. 15 (Yonhap) -- Kim Beom-su, the founder of the mobile platform giant Kakao Corp., was set to be referred to the prosecution Wednesday over alleged stock price manipulation in connection with the firm's takeover of a K-pop entertainment house.

The mobile platform company, its entertainment subsidiary and three senior Kakao executives had been earlier referred to the prosecution on suspicions of manipulating the stock prices of K-pop powerhouse SM Entertainment in a bidding war in February against Hybe, the parent company of K-pop superband BTS' management agency BigHit.

Via a tender offer, Hybe had sought to take over additional SM stocks from small shareholders for 120,000 won (US$92) per share after acquiring a 14.8 percent stake from SM founder Lee Su-man.

Kakao and its executives are suspected of inflating SM share prices by investing some 240 billion won in a bid to take over SM Entertainment itself.

"I have been told that former Kakao Chairman Kim was scheduled to be referred to the prosecution today along with lawyers related to the case," an official at the Seoul Southern District Prosecutors Office said.

Last month, the Financial Supervisory Service referred Kakao, Kakao Entertainment and Kakao's chief investment officer Bae Jae-hyun to the prosecution for further investigation and potential indictment on charges of violating the Capital Markets Act.

The financial watchdog questioned Kim as a suspect last month.

The prosecution official said several lawyers who provided legal advice to Kakao for the takeover bid were also scheduled for prosecution referral later in the day.

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