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An Arrest Warrant Issued For The Founder Of Kakao Over SM Stock Manipulation
🕑 Added 2024-07-22 17:11:16 +0000 UTCKim Beom-soo, chairman of Kakao's management reform committee, is currently at the center of allegations regarding the manipulation of SM Entertainment's stock price. As of now, he faces a critical juncture that could lead to his detention. It's been about eight months since the Financial Supervisory Service recommended his indictment to the prosecution. To persuade the court, the prosecution has prepared a 200-page PowerPoint presentation, asserting they have ample evidence to support the charges.
Chairman Kim, however, maintains that there was no illegal activity and that the purchase was legitimate. The court must now decide whether to side with the prosecution or Chairman Kim, who are embroiled in a heated debate over whether he directly ordered and approved the stock price manipulation. The decision will be made by Chief Judge Han Jeong-seok of the Seoul Southern District Court, who will conduct a suspect interrogation on July 22 to examine the charges against Chairman Kim for violating the Capital Market Act.
Chairman Kim is accused of colluding with the private equity fund management company One Asia Partners to artificially inflate SM Entertainment’s stock price above Hive’s public offering price (120,000 won) in February of the previous year. This was allegedly done to block Hive's public offering during the SM Entertainment acquisition process, involving an investment of approximately 240 billion won. The prosecution argues that Chairman Kim, as the head of Kakao, could not have been unaware of the group-wide price manipulation and that he directly ordered and approved it. They believe he conspired with Kakao Investment Chief Bae Jae-hyun and One Asia Chairman Ji Chang-bae, who are both on trial for price manipulation.
Chairman Kim’s defense strongly opposes the prosecution’s claims. They argue that while he did receive and approve a report on the SM Entertainment acquisition, he was not informed about the specific methods of acquisition. On the day after the prosecution requested an arrest warrant (July 18), Chairman Kim issued an official statement denying any involvement in illegal activities, asserting, “I have never ordered or condoned any illegal activity.” His defense team contends that the purchase was a legitimate transaction aimed at securing shares for business cooperation.
When issuing an arrest warrant, the court considers the risk of flight, the risk of evidence destruction, and the seriousness of the case. Given that Chairman Kim is a corporate CEO, the prosecution is expected to emphasize the seriousness of the case and the potential risk of evidence destruction. They argue that with former CEO Bae and Chairman Ji, who are both suspected of collusion and were released on bail, there is an increased possibility that Chairman Kim could contact them and destroy evidence.
According to an investigation by News 1, the prosecution has prepared a 200-page PowerPoint presentation for today's warrant review, claiming to have secured substantial evidence of Chairman Kim's involvement in stock price manipulation. They plan to demonstrate the necessity of his arrest based on this evidence, emphasizing the magnitude of the case given Kakao’s status as a major company and the unprecedented nature of the alleged hundreds of billions of won in stock price manipulation.
The warrant review will begin at 2:00 PM, with Chief Judge Han hearing arguments from both sides. Given the extensive presentations, the review is expected to last at least two hours. Chairman Kim will be taken to the Southern Detention Center in Guro-gu to await the outcome, which is expected to be announced late in the evening at the earliest.
source: https://n.news.naver.com/article/421/0007678439?sid=102
5 MORE KAKAO EXECUTIVES BEING INVESTIGATED
The Financial Supervisory Service’s Capital Market Special Judicial Police have transferred five officials from the private equity fund operator One Asia Partners to the prosecution on charges of manipulating SM Entertainment's stock price. This move signals an expansion of the investigation into Kakao’s alleged involvement in stock price manipulation.
According to the financial investment industry on the 24th, the Seoul Southern District Prosecutors’ Office received the five One Asia Partners officials from the Special Judicial Police on the 18th. The 2nd Financial Investigation Division of the Seoul Southern District Prosecutors’ Office will continue the investigation. This development comes about two months after the Special Judicial Police handed over individuals related to the stock price manipulation allegations during Kakao’s acquisition of SM Entertainment last November.
In November, the Special Judicial Police transferred six people to the prosecution with a recommendation for indictment on charges of violating the Capital Market Act. Among those referred were Kim Beom-soo, head of Kakao’s Future Initiative Center, Hong Eun-taek, CEO of Kakao, Lee Jin-soo and Kim Sung-soo, the CEOs of Kakao Entertainment, and two lawyers from Yulchon Law Firm who advised Kakao. Initially, the Financial Supervisory Service’s special prosecutors identified a total of 18 suspects (including corporations). However, it is widely believed that the number of suspects could increase as the investigation progresses. A capital market lawyer noted that in such cases, more suspects often emerge during the investigation, making it difficult to predict the final number of individuals who will be referred to the prosecution.
The special prosecutors are currently investigating four former SM Entertainment executives, including current SM CEO Jang Cheol-hyeok, CSO Jang Jae-ho, and former co-CEOs Lee Sung-soo and Tak Young-joon. Industry sources have also indicated that Align Partners is now involved in the investigation.
The Financial Supervisory Service’s special investigation team reported that during the competition between Kakao and Hybe to acquire SM Entertainment's management rights in February, Kakao allegedly drove up the stock price by purchasing about 240 billion won worth of SM Entertainment stocks. This action was purportedly intended to thwart Hybe's public offering. As of the day of the report, Kakao's stock price was trading at 56,900 won, down 1.39% from the previous day.
Previously, the Financial Supervisory Service’s special prosecutors had referred three individuals, including Bae Jae-hyun, head of investment at Kakao, and two corporations, Kakao and Kakao Entertainment, to the prosecution on similar charges.
https://n.news.naver.com/article/015/0004940482?sid=101
Comments
madkpoplover
Anyone who don't really understand why what kakao did counts as stock manipulation and not just mere buying and selling should go and watch Seoulite TV's youtube video on this. He explained it in very simple terms. Yeah i admit that he simplified it a lot by saying 120 million won as 120 dollar or something but he gave a disclaimer saying that he's labeling the actual money in smaller numbers so that it's easier for him to explain and because smaller numbers help us understand bettter. But even with the simplification he seemed to have kept all the important details. Kakao was partially successful in the way that they had barred hybe from becoming majority in SM but if they become completely successful then what kakao did could be applied by foreign companies(especially chinese ones) to gobble up the control of important south korean companies like hyundai, samsung etc. because it opens that door for them if kakao is successful. So it's very important that the people involved with this get punished
katesingsr&b
About time, I knew sometime was going on that seem very suspect at the time with the sudden high rise in the Share price it didn't sit right with me. One expect rise's and fall but sudden very large one's are always a bit suspect.
Tamara Carman
WOW! that headline shocked me… now gonna read about it,. As always, thanks Fairlane!
