Kakao shares tumble as founder Kim Beom-su arrested for market manipulation

Industry

Published: 23 Jul. 2024, 10:44 Updated: 23 Jul. 2024, 11:03

Kakao shares tumble as founder Kim Beom-su arrested for market manipulation

A passenger walks by a Kakao Friends shop, a character goods shop run by Kakao, in Seoul. [YONHAP]

Shares of Kakao and its affiliates plunged, with the exception of Kakao Bank, as Kim Beom-su, founder of the Korean IT giant, was arrested early Tuesday morning on alleged market manipulation charges.

Kakao shares dropped 3.17 percent on Tuesday morning and were trading at 39,750 won ($28.70).

Shares of Kakao Games, the game-producing affiliate of the IT company, were trading at 18,500 won, a drop of 2.48 percent compared to the previous trading day.

Financial affiliate Kakao Pay was trading at 25,950 won per share, slipping by 3.53 percent.

However, shares of Kakao Bank, the internet bank affiliate of Kakao, inched up by 2.37 percent on Tuesday morning, trading at 21,600 won per share. It once rose by as much as eight percent in earlier trading.

If Kakao, currently the biggest shareholder of the internet-only bank company, receives fines or harsher punishments, it would have to sell off its stake. This is because Korean law bans a company with such a financial crime record from becoming the largest stakeholder of an internet-only bank.

Kakao is accused of having colluded with a private equity fund, OneAsia Partners, to artificially inject 240 billion won into the market to inflate SM Entertainment shares in order to block competitor HYBE from acquiring it.

Kakao ultimately came out as the winner in the takeover, allowing itself and its subsidiary Kakao Entertainment to jointly secure a 39.87 percent stake in SM Entertainment.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]