FSS summons Kakao founder over alleged stock manipulation in SM takeover

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FSS summons Kakao founder over alleged stock manipulation in SM takeover

Published: 20 Oct. 2023, 11:45

LEE JAE-LIM
lee.jaelim@joongang.co.kr

Kakao founder Kim Beom-su [KAKAO]

The probe into Kakao's alleged manipulation of SM Entertainment share prices to take over the K-pop agency deepens as the Financial Supervisory Services (FSS) summoned Kakao founder Kim Beom-su to appear for questioning on Monday.

Kakao's executives are suspected of injecting 240 billion won ($176.6 million) to purchase shares of SM Entertainment to inflate the shares' price to win the bidding war against HYBE over the agency.

The Seoul Central District Court issued an arrest warrant for Kakao Chief Investment Officer Bae Jae-hyun on Thursday after his questioning the day before.

The prosecution had filed arrest warrants on Oct. 13 for Bae and two other Kakao executives. The two other executives weren't arrested.

The financial regulator reportedly has evidence to prove its case against Kakao, such as recorded phone calls and text messages among the company's executives, since launching its investigation in February.

Its special investigation team raided the offices of Kakao and SM Entertainment in April and Kakao founder Kim Beom-su's home and office in August.

Kakao and another K-pop agency, HYBE, which manages popular boy band BTS, were involved in a high-profile bidding war to take over SM Entertainment earlier this year.

Kakao came out as the winner, becoming the largest shareholder of SM Entertainment with a combined holding of 39.87 percent.

Following the news of Bae's arrest and Kim's summoning, Kakao's shares plunged 3.7 percent to 39,000 won as of 10:15 a.m. Friday.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]