Kakao founder indicted for stock manipulation

Kim Beom-su (center), the founder of Kakao Corp., heads toward a courtroom for a hearing at the Seoul Southern District Court in the capital on Monday. (Yonhap)

Seoul, South Korea — The billionaire founder of South Korean internet conglomerate Kakao was indicted on Thursday for stock manipulation in his pursuit of buying K-pop powerhouse SM Entertainment.

Kim Beom-su has been held since his arrest last month, accused of manipulating stock prices in an attempt to thwart a rival bid by HYBE — the agency behind K-pop megastars BTS — to secure a nearly 40 percent controlling stake in SM.

Three current and former Kakao executives were also indicted on Thursday.

READ: Founder of tech giant Kakao arrested for stock manipulation

Founded in 2010, Kakao has grown into a sprawling empire with interests in a range of areas including an online bank, South Korea’s largest taxi-hailing app and KakaoTalk — the country’s biggest messaging app, which is installed on 90 percent of phones.

It also has a vast entertainment portfolio, encompassing music labels and talent management, which it augmented significantly last year by becoming the largest shareholder in SM.

Prosecutors have accused Kakao of buying 240 billion won ($174 million) worth of SM shares over 553 occasions in February 2023 at inflated prices, in a deliberate effort to thwart a takeover bid by HYBE.

Kim “mobilised funds that were not related to entertainment to purchase stocks (of SM Entertainment), spending them for illegal stock manipulation instead of on affiliates’ management”, the Seoul Southern District Prosecutors’ Office said in a news release.

Kim and his accomplices sought to “destroy evidence by deleting group chats” related to the SM share acquisition, prosecutors said.