SEOUL, South Korea (AP) — South Korean prosecutors announced Tuesday that they had arrested the founder of technology giant Kakao Corp. on suspicion of manipulating stock prices during the company’s stock listing. take over Last year, he received an offer from a major K-pop agency.
Kim’s arrest came after the Seoul Southern District Court approved an arrest warrant, citing concerns he might flee or destroy evidence.
Prosecutors have up to 20 days to investigate and decide whether to indict Kim, said a senior prosecutor at the Seoul District Prosecutors’ Office, who asked not to be named because the investigation is ongoing.
Kim faces charges that he worked with private equity fund managers to engineer and approve a scheme to artificially inflate shares of K-pop agency SM Entertainment and block a takeover of Hybe Corporation, the parent company of another K-pop giant that became a global sensation. BTS, According to prosecutors, this was to block the takeover of SM Entertainment.
Kim, 58, denies the allegations, according to Seoul prosecutors. He could not immediately be reached for comment.
Another Kakao executive and the head of a stock fund have already been charged in the case, prosecutors said.
Kakao is best known for its wildly popular free mobile chat app, KakaoTalk, which reportedly had about 41 million active users in South Korea, a country of 52 million, as of December. The company has capitalized on the mobile messenger’s popularity in recent years to expand into services such as banking, online shopping and gaming.
Kakao said in a statement on Tuesday that it was “disappointed by the current situation.” The company said it would work to minimize the management gap, but did not directly address Kim’s arrest.
Kakao shares fell more than 5% on Tuesday.
SM Entertainment Executives at the company had opposed Hyve’s attempt to expand its ownership in the company, calling it a hostile takeover, saying it would lead to industry monopoly and create more of a burden for fans, and that if Hyve took control of the company, SM artists might not be prioritized.
SM’s top executives have supported Kakao’s tender offer as “friendly” and described the technology company as an “optimal strategic cooperation partner.”
