0
0
South Korean prosecutors have indicted Kakao Corp. founder Kim Beom-su on charges of stock manipulation. According to a Yonhap News report on Thursday, the tech tycoon, also known as Brian Kim, has been formally charged with market violations during Kakao Corp.’s takeover battle for SM Entertainment Co.
According to a Bloomberg report, prosecutors allege that Kim was involved in a scheme to inflate the price of SM Entertainment’s stock, surpassing a rival offer of ₩120,000 (approximately $87) from Hybe Co, the agency behind K-pop superstars BTS. This alleged manipulation took place over four days in mid-February 2023, with additional actions later that month.
Financial regulators accuse executives at Kakao and its unit Kakao Entertainment Corp. of purchasing ₩240 billion ($173 million) worth of SM stock at the time to disrupt Hybe’s offer. This was part of a heated bidding war that preceded Kakao’s acquisition of nearly 40% of SM Entertainment in March last year. The bidding war was a significant event in the tech industry, with both companies vying for a stake in the lucrative K-pop market.
Shockwaves Through South Korean Tech Industry
South Korea’s tech world is reeling as its most prominent social media mogul, Kim, faces formal charges. Indicted on Thursday, the billionaire remains in custody, becoming the latest high-profile executive to be ensnared in a corporate scandal that has captivated the nation.
A representative for the prosecutor’s office confirmed the accuracy of Yonhap’s report. Kim Beom-su and Kakao Corp. spokespeople have consistently denied the allegations, asserting that no illegal activities took place during the acquisition of SM Entertainment.
On Thursday, a company representative stated that they intend to reveal the truth during the upcoming trial and will strive to minimise any disruption to management, with Chief Executive Officer Chung Shina leading the efforts. The trial’s outcome could dramatically change Kakao Corp.’s future, depending on the verdict and its severity.
Another High-Profile Fall for Korean Business Elite
As the founder of a dominant social media platform in Korea, his alleged involvement in stock manipulation has far-reaching implications. The case underscores the intense competition and potential for misconduct within South Korea’s corporate world, particularly in high-growth sectors. The outcome of the trial will not only determine the fate of a high-profile individual but could also shape future regulations and investor confidence in the country’s tech industry. Furthermore, the scandal could have implications for the K-pop industry, potentially affecting the financial stability and reputation of K-pop agencies and their artists.
Beyond the legal ramifications, this case highlights the blurred lines between business, entertainment, and finance in South Korea. The close relationship between tech giants, K-pop agencies, and financial institutions creates fertile ground for potential abuses of power. As such, increased scrutiny and stricter regulations may be necessary to prevent similar incidents in the future.
