A Seoul court has issued an arrest warrant for Brian Kim, the founder of the South Korean internet conglomerate Kakao, on charges of stock price manipulation concerning the company’s acquisition of K-pop agency SM Entertainment in 2023
On Tuesday, the Seoul Southern District Court announced that it had issued a warrant for Kim’s arrest following a hearing on Monday, citing “concerns of evidence destruction and flight.”
He may be incarcerated for a maximum of 20 days while prosecutors conduct additional inquiries before filing charges. This can potentially undermine Kakao’s operations and AI plans, as the founder has been a critical figure in the company’s strategic decisions.
Kakao’s spokesperson informed TechCrunch that the organization would try to reduce the management disparity with its co-chairs and council.
Kim is currently under investigation for allegations that he manipulated SM Entertainment’s share price during a bidding war for the company in 2023. Hybe, the proprietor of the South Korean music agency BigHit, responsible for the K-pop boyband BTS, competed with Kakao.
In February 2023, Kakao was accused of purchasing KRW 240 billion (~ $174 million) of SM Entertainment’s shares through 553 transactions. This allegedly resulted in Hybe withdrawing its offer, as the company’s share price rose above Hybe’s tender offer price of 120,000 KRW per share.
Kakao issued a statement last week denying the allegations, asserting that Kim had never authorized or permitted any unlawful activities.
After the acquisition, Jae-Hyun Bae, Kakao’s chief investment officer, was apprehended on suspicion of manipulating stock prices in October last year. He is presently undergoing a trial.
In 2010, KakaoTalk, South Korea’s most popular messaging program, was introduced by the company established in 2006.
It has evolved into the nation’s Super App. Currently, it provides various services, such as the on-demand taxi service Kakao Mobility, the online financial platform Kakao Bank, and the music streaming service Melon.
Tracxn reports that Kakao completed 13 acquisitions between 2011 and 2022, with an average acquisition value of $546 million.