Brian Kim, the founder of the South Korean internet giant Kakao, was given an arrest warrant by a court in Seoul on charges of manipulating stock prices during the company’s takeover of K-pop agency SM Entertainment in 2023.
Thursday, the Seoul Southern District Court said that Kim should be arrested because of “concerns of evidence destruction and flight.” The hearing took place on Monday.
He could go to jail for up to 20 days while the police look into the case more before charging him. The founder has been very important to Kakao’s strategic decisions, so this could affect how the business works and its plans for AI.
Kakao told Parhlo Wor that the company would do everything it could to close the management gap between its co-chairs and board.
People are accusing Kim of tampering with the share price of SM Entertainment during a 2023 bidding war for that business. Hybe, the owner of the South Korean music business BigHit, which works with the boy band BTS, was in competition with Kakao.
It is said that Kakao bought 240 billion won ($174 million) worth of SM Entertainment shares in 553 deals in February 2023. Hybe reportedly pulled its offer because the share price of the company went above its tender offer price of 120,000 KRW per share.
Kakao said in a statement last week that the claims are false because Kim had never ordered or allowed anything wrong to happen.
Jae-Hyun Bae, who was Kakao’s chief investment officer, was arrested in October of last year on charges of manipulating stock prices after the takeover. He is being tried right now.
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Since its start in 2006, Kakao has made KakaoTalk the most famous messaging app in South Korea. It grew to be the best app in the country and now provides many services, such as Kakao Mobility, an on-demand cab service, Kakao Bank, an online bank, and Melon, a music streaming service. Based on Tracxn, Kakao made 13 deals from 2011 to 2022, with an average purchase price of $546 million.
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