Seoul prosecutors on Friday sought a 15-year prison sentence and a fine of 500 million KRW (approx. $370,000) for Kim Beom Su, founder of Kakao, over allegations of stock price manipulation during the company’s acquisition battle for SM Entertainment.
The Seoul Southern District Court’s Criminal Agreement Division 15 (Chief Judge Yang Hwan Seung) held a final hearing on August 29 for Kim and six other defendants indicted on charges of violating the Capital Markets Act. Prosecutors argued that Kim, as the ultimate decision-maker of Kakao Group, approved market-rigging schemes to block rival HYBE’s tender offer and conceal Kakao’s acquisition intentions.
“Despite being informed that Kakao was eligible to compete legally, Kim repeatedly opposed it and ordered the acquisition of SM ‘peacefully,’” prosecutors said. “He authorized the stock price manipulation scheme to hinder HYBE’s bid, making him the most culpable figure in this case.”
Prosecutors further stressed that Kim, as Kakao’s largest shareholder, stood to benefit the most financially, thereby warranting harsher punishment compared to his co-defendants.
In addition to Kim, prosecutors requested a 12-year prison term for former Kakao chief investment officer Bae, 10 years for Ji Chang Bae, CEO of Oneasia Partners, and 9 years for former Kakao Entertainment CEO Kim Sung Su. Former Kakao CEO Hong Eun Taek, former head of Kakao’s investment strategy Kang Ho Jung, and former Oneasia Partners vice president Kim Tae Young each face a recommended 7-year sentence.
Prosecutors also sought fines of 500 million KRW (approx. $370,000) each for Kakao Corp. and Kakao Entertainment.
Kim was indicted and detained last August on charges of manipulating SM Entertainment’s share price in February 2023. Prosecutors allege that Kim and others attempted to artificially raise SM’s stock price above HYBE’s public tender offer of 120,000 KRW (approx. $89) per share, purchasing about 130 billion KRW (approx. $96 million) worth of SM shares through Kakao and Kakao Entertainment in 190 transactions, and an additional 110 billion KRW (approx. $81 million) worth via Oneasia Partners in 363 separate trades.
The court is expected to deliver its ruling in the coming months.
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