SEOUL (CelebrityAccess) – Kim Beom-su, the founding father of South Korean telecom large Kakao Corp., has been indicted on prices of inventory value manipulation related to Kakao’s intense bidding struggle with Ok-pop large HYBE over management of SM Leisure final 12 months.
In response to stories from the Seoul Southern District Prosecutors’ Workplace, Kim was indicted on Thursday (August 8) for violating the Monetary Funding Providers and Capital Markets Act. This indictment follows Kim’s arrest after a radical investigation that has been ongoing for a number of months.
Former Kakao CEO Hong Eun-taek and Kim Sung-soo, the previous CEO of Kakao Leisure, have been additionally indicted on the identical day Kim was arrested, as reported by JoongAng Every day.
Prosecutors allege that Kim and different Kakao executives engaged in a deliberate marketing campaign to inflate SM Leisure’s inventory value to be able to outmaneuver HYBE in the course of the bidding struggle. They declare that Kim and his associates injected KRW 240 billion (USD $174 million) into SM Leisure inventory throughout 553 transactions between February 16-17 and February 27-28, 2023.
Initially, Kim was solely linked to the latter set of transactions, allegedly carried out with help from OneAsia Companions, an asset administration agency related to Kakao. Nonetheless, additional investigations have led prosecutors to consider that Kim was concerned in all situations of the alleged inventory manipulation, as reported by the Korea Herald.
Moreover, the CEO of OneAsia, recognized solely by the surname Ji, can also be dealing with trial over the identical allegations. Kakao’s Chief Funding Officer, Bae Jae-hyun, was arrested and indicted on comparable prices final October.
Prosecutors additional declare that Kim and Kakao violated South Korean securities legal guidelines by failing to reveal their acquisitions in SM Leisure. South Korean legislation mandates that any entity holding greater than a 5% stake in a publicly traded firm should disclose their share purchases to regulators. On the time of the transactions, Kakao held an 8.16% stake in SM.
In response to JoongAng Every day, in response to the indictment, Kakao issued a press release on Thursday expressing its intent to “diligently vindicate the details throughout court docket trial” and to “decrease the administration emptiness” attributable to Kim’s arrest.
The transactions in query reportedly inflated SM’s inventory value above KRW 120,000 ($87) per share, the identical value HYBE paid when it acquired a 14.8% stake in SM from its founder, Lee Soo-man. HYBE was additionally providing to buy further shares at this value however finally withdrew from the bidding struggle, leaving Kakao in management with a 39.9% stake in SM.
Regardless of these severe allegations, Korean commerce regulators authorised Kakao’s takeover of SM Leisure earlier this 12 months, albeit with sure situations designed to forestall Kakao from abusing its dominant place within the music market. Kakao owns Melon, South Korea’s largest music streaming service, which is now required to distribute music from competing labels and distributors.
Kakao additionally operates KakaoTalk, South Korea’s main prompt messaging service. Amid the continuing prison investigation, Kakao has skilled a big decline in its inventory worth, shedding greater than 40% for the reason that begin of the bidding struggle for SM Leisure. On Thursday, the inventory was buying and selling at round KRW 38,450, down from roughly KRW 67,000 in February of final 12 months.
Unique Story Beneath – Revealed July 17, 2024
The Seoul Southern District Prosecutors Workplace has requested an arrest warrant for Kim Beom-su, the billionaire founding father of Kakao Corp., whose leisure division now controls SM Leisure (SM).
In response to South Korean information stories, prosecutors declare that Beom-su violated South Korea’s Monetary Funding Providers and Capital Markets Act by allegedly plotting to control SM’s inventory value to push HYBE out of the bidding for the Ok-pop company.
In response to the Korea Herald, they allege that Beom-su and different Kakao executives inflated SM’s inventory value by injecting KRW 240 billion (USD 174 million) into the corporate by 553 inventory value purchases in mid to late February of 2023. Moreover, prosecutors accuse Kakao of failing to report its stake in SM in the course of the bidding struggle. Non-public fairness fund administration agency OneAsia Companions can also be accused of colluding with Beom-su within the inventory manipulation, stories Korea JoongAng Every day.
The request for the tech large founder’s arrest warrant comes shortly after he endured what JoongAng Every day described as “20 hours of intense interrogation” by authorities from July 9 into the early hours of July 10, throughout which Beom-su reportedly denied most allegations.
In a press release, Kim’s attorneys at Sejong Legislation Agency denied any wrongdoing by the Kakao founder.
“Kim Beom-su, chairman of Kakao’s Company Alignment Council, didn’t instruct nor condone any unlawful actions relating to the acquisition of SM Leisure shares final 12 months,” the legal professional stated in a press assertion. “The transaction was a respectable market buy aimed toward securing shares for enterprise collaboration purchases. However, we remorse that this matter has progressed to a stage the place the prosecution has filed for an arrest warrant. We’ll diligently clarify and make clear these factors in the course of the warrant overview course of.” the assertion learn, as quoted by JoongAng Every day.
The Seoul Southern District Court docket will overview the prosecution’s arrest warrant request on Monday (July 22).
SM is taken into account the second-largest Ok-pop firm behind HYBE. Its roster contains common acts like Vespa, EXO, Women Technology, Crimson Velvet, and Tremendous Junior.
Throughout final 12 months’s bidding struggle, the Herald reported that SM’s inventory value soared above KRW 120,000 ($87) per share. This was the value at which HYBE had bought 14.8% of SM from its founder, Lee Soo-man, and the fastened value at which it was shopping for shares from different shareholders.
The inflated inventory value led to HYBE’s withdrawal from bidding, successfully permitting Kakao Corp. to regulate SM with a 39.9% stake.
Nonetheless, HYBE filed a authorized grievance towards Kakao, alleging inventory value manipulation, which prompted an investigation, together with raids on Kakao’s headquarters and SM’s workplaces.
In October final 12 months, Kakao’s Chief Funding Officer, Bae Jae-hyun, was arrested, and Seoul prosecutors indicted him for violating the Capital Markets Act. Bae and the chief government of OneAsia Companions, recognized solely by the surname Ji, are at present standing trial on associated prices.
Regardless of the accusations, Korean commerce regulators authorised the Kakao-SM deal earlier this 12 months, with situations to make sure Kakao doesn’t abuse its sturdy place within the music market. Amongst these situations is a requirement for Kakao-owned Melon, South Korea’s largest music streaming service, to distribute music from labels and distributors that compete with SM.