<\/p>\n
Prosecutors have requested a 15-year prison sentence for Kim Beom-su, the founder of South Korean tech giant Kakao Corp., over his alleged role in an effort to manipulate SM Entertainment<\/a>\u2019s stock price during a bidding war against K-pop giant HYBE.<\/p>\n Kim was arrested<\/a> and indicted<\/a> last year. Prosecutors alleged he coordinated a scheme in February 2023 to bid up the stock price of SM Entertainment<\/strong> above the 120,000 won per share that HYBE had offered in its bid for SM.<\/p>\n Prosecutors say the scheme involved funneling some KRW 240 billion<\/strong> ($172 million<\/strong> at the current exchange rate) across more than 300 individual transactions, causing SM Entertainment stock to rise dramatically.<\/p>\n Around that time, SM\u2019s shares briefly spiked from around KRW 75,000<\/strong> per share to more than KRW 147,000<\/strong>, before falling back down again. HYBE\u2019s offer to buy SM, a rival K-pop company, fell through<\/a> and Kakao Corp. tabled its own bid. Kakao eventually emerged as the winner in the bidding war, taking a 39.9%<\/strong> stake<\/a> in SM Entertainment.<\/p>\n Prosecutors made the request for the 15-year prison sentence during closing arguments in Kim\u2019s trial at the Seoul Southern District Court on Friday (August 29). They also requested that Kim pay a fine of KRW 500 million<\/strong> ($359,000<\/strong>).<\/p>\n According to<\/a> Korea JoongAng Daily<\/em>, prosecutors also asked for a 12-year sentence for former Kakao chief investment officer Bae Jae-hyun<\/strong>, and seven-year prison terms for Kim Sung-soo<\/strong>, CEO of subsidiary Kakao Entertainment<\/strong>, as well as former Kakao CEO Hong Eun-taek<\/strong>, former Kakao investment strategy head Kang Ho-jung<\/strong> and One Asia Partners<\/strong> President Kim Tae-young<\/strong>.<\/p>\n One Asia Partners is a private equity fund management firm with links to Kakao that prosecutors allege was involved in the scheme.<\/p>\n \u201cKim approved the manipulation of SM Entertainment\u2019s stock price through on-market purchases in order to conceal Kakao Corp.\u2019s intention to acquire SM and block Hybe\u2019s tender offer, and therefore bears the greatest responsibility,\u201d prosecutors said, as quoted by<\/a> The Korea Herald<\/em>.<\/p>\n \u201cAs the de facto head of the Kakao Group, he was the ultimate beneficiary of the scheme.\u201d<\/p>\n Prosecutors in the criminal trial of Kim Beom-su<\/span><\/p>\n<\/blockquote>\n \u201cAs the de facto head of the Kakao Group, he was the ultimate beneficiary of the scheme,\u201d they said. \u201cHe repeatedly instructed his executives to pursue SM\u2019s acquisition \u2018peacefully,\u2019 approved stock manipulation measures and orchestrated the crime in a calculated manner.\u201d<\/p>\n Although Kakao Corp. is currently led by CEO Chung Shin-a<\/strong>, who also heads its Corporate Alignment Council, Kim remains the company\u2019s largest shareholder with a 24.12%<\/strong> stake, according to<\/a> The Korea Times<\/em>.<\/p>\n Kim\u2019s attorneys rejected the allegations, calling them \u201can excessive stretch by prosecutors\u201d and asserted the stock purchases were legitimate.<\/p>\n \u201cThe purchases were not made to block HYBE\u2019s tender offer,\u201d Kim told the court, as quoted by JoongAng Daily<\/em>. \u201cRather, we anticipated a price surge in SM shares if HYBE\u2019s bid failed.\u201d<\/p>\n \u201cAt no point did the defendant consider using illegal means such as stock manipulation to acquire SM,\u201d an attorney for Kim stated. \u201cHe had no connection with One Asia Partners in this matter.\u201d<\/p>\n\n