'SM Enter Sisejojong' Kakao Kim Beom-su Faces Imprisonment Decision...Warrant Review Results Expected Late Night

Kakao founder and Management Innovation Committee Chairman Kim Beom-su faces the possibility of detention. The decision on whether he will be detained is expected to be made late on the night of the 22nd.

Kim Beom-su, Chairman of Kakao Management Innovation Committee (Photo by Yonhap News)

Han Jeong-seok, the chief judge in charge of warrants at the Seoul Southern District Court, will conduct a pre-detention suspect interrogation (warrant substantive examination) for Chairman Kim, who is accused of violating the Capital Markets Act, around 2 p.m. that day. Chairman Kim is suspected of manipulating the stock price to fix SM’s share price higher than the public tender offer price (120,000 won) in order to block HYBE’s public tender offer during the acquisition competition over SM in February last year. The prosecution filed a detention warrant for Chairman Kim on the 17th.

In legal circles, it is speculated that the testimony of Lee Junho, head of Kakao Entertainment’s Investment Strategy Division, to the prosecution became key evidence. It is known that Lee testified to the prosecution that there was “Chairman Kim’s confirmation (approval)” during the process of purchasing SM shares to block the public tender offer. This implies that Chairman Kim effectively allowed the stock price manipulation.

When filing the detention warrant for Chairman Kim, the prosecution reportedly specified the date of the stock price manipulation as a single day, February 28 of last year. This was the last day of HYBE’s public tender offer period (February 10?28, 2023) and the day when funds from Kakao and Kakao Entertainment were invested in purchasing SM shares.

However, unlike former CEO Bae, since the date of the stock price manipulation is limited to one day, there is analysis that the conspiracy connection with the private equity fund One Asia Partners may not have been proven. Former Kakao Chief Investment Officer Bae Jae-hyun was previously indicted for obstructing the public tender offer by accumulating SM shares on four days?February 16, 17, 28, and 29 last year. During this process, the prosecution believes that funds from the private equity fund One Asia Partners, which is suspected of conspiring with Kakao, were also mobilized. However, the dates when One Asia Partners’ funds were invested were omitted from Chairman Kim’s detention warrant request.

Chairman Kim’s side strongly denies the allegations. His legal team stated immediately after the detention warrant was filed on the 17th, “There was no instruction or tolerance of any illegal acts in the purchase of SM shares last year,” and claimed, “The purchase was a normal on-market acquisition based on legitimate demand for securing shares for business cooperation.” They added, “We regret that the prosecution has filed a detention warrant and will sincerely explain this during the warrant hearing process.”

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