'SM Market Manipulation' Kakao's Bae Jae-hyun Side "Does Not Exhibit Any Illegality"

The side of Bae Jae-hyun, Kakao's Head of Investment, who was arrested and indicted on charges of market manipulation during the SM Entertainment management rights dispute, once again denied the allegations, stating, "Why should the state intervene in the free competition between individuals in the capital market?"

At the continuation of the first trial held on the 9th at the Seoul Southern District Court Criminal Division 13 (Presiding Judge Myung Jae-kwon), Bae's lawyer argued, "Even if the defendant had the purpose of competing for SM's management rights or preventing a public tender offer, such motives themselves clearly do not constitute any illegality under capitalism or a free market economy."

[Photo by Yonhap News]

The lawyer claimed, "The mere purchase of stocks is not illegal, and only when motives and purposes combine to create illegality does punishability arise, but the prosecution has not provided any convincing explanation in this case."

He continued, "If someone declares a public tender offer, can no one in the market stop it? Should all stock market participants just give up? Why should the state protect and give preferential treatment to the public tender offer market first?"

In response, the prosecution rebutted, "The defense claims that the indictment in this case is a normal share acquisition act by Kakao in response to HYBE's hostile takeover, but that is merely the position of SM's management, who were at odds with major shareholder Lee Soo-man."

The prosecution explained, "HYBE was conducting a legitimate public tender offer, and although Kakao had a lawful alternative public tender offer method prescribed by the Capital Markets Act due to the injunction lawsuit, they could not use it and instead engaged in illegal market manipulation."

According to the prosecution, Bae conspired with Lee Junho, Head of Kakao Entertainment Investment Strategy Division, and Kim Seong-su, CEO of Kakao Entertainment. They are accused of manipulating the market to set and fix SM Entertainment's stock price higher than HYBE's public tender offer price of 120,000 won in order to obstruct HYBE's public tender offer during the acquisition process in February last year.

Bae and others mobilized approximately 240 billion won to accumulate SM Entertainment shares on the open market on February 16-17 and 27-28. The prosecution believes they purchased at high prices a total of 553 times. During this process, they are also charged with failing to report large stock holdings to financial authorities.

This content was produced with the assistance of AI translation services.