Kim Beom-su, the billionaire founder of South Korean internet conglomerate Kakao, has been indicted on allegations of stock market manipulation during last year’s bidding war with Hybe Co for K-pop giant SM Entertainment.
SM Entertainment is a record label, talent agency and music production company. It also represents several K-pop stars.
Kim, who has been detained since his arrest late last month, has been accused of violating South Korea’s Financial Investment Services and Capital Markets Act by the Seoul Southern District Prosecutors’ Office.
It emerged in July that prosecutors in South Korea were seeking a warrant to arrest Kim.
Three current and former Kakao executives have also been indicted, including former Kakao CEO Hong Eun-taek and Kim Sung-soo, the ex-chief executive of subsidiary Kakao Entertainment.
On August 1 last year, SM announced that it would form a joint venture division with Kakao in North America after the latter won a bidding war against Hybe Co., the label behind boyband BTS.
As a result, Kakao owns 20.97% of the company, its subsidiary Kakao Entertainment has 19.41%, Hybe owns 12.58% and the rest is distributed between other parties.
Financial regulators accuse Kakao executives of buying ₩240bn in shares of SM Entertainment in an attempt to disrupt Hybe’s offer.
They claim that the shares were privately purchased at prices above Hybe’s tender price offer on 553 occasions.
Hybe was then forced to withdraw its offers to the smaller shareholders after seeing prices take a significant jump.
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