South Korean prosecutors announced Tuesday that they have arrested the founder of Kakao Corp., a technology giant, on charges of alleged stock price manipulation related to the company’s acquisition of a major K-pop agency last year. The arrest of Kim followed the approval of an arrest warrant by the Seoul Southern District Court, which cited concerns over potential flight or tampering with evidence. This development marks a significant legal and regulatory challenge for Kakao, highlighting ongoing scrutiny over financial practices within South Korea’s corporate sector.
According to a senior prosecutor from a Seoul district prosecutors’ office, prosecutors have a maximum of 20 days to investigate Kakao founder Kim and decide whether to formally charge him. The prosecutor, who requested anonymity due to the ongoing investigation, revealed that Kim is accused of orchestrating and endorsing schemes in collaboration with a private equity fund operator. These alleged schemes aimed to manipulate the stock price of K-pop agency SM Entertainment. The objective purportedly was to thwart Hybe Corp., the parent company of BTS, from acquiring SM Entertainment.
Kim’s arrest and the subsequent investigation underscore significant legal challenges for Kakao, a major technology company in South Korea. The allegations of stock price manipulation and interference in corporate acquisitions highlight regulatory concerns about transparency and fairness in financial dealings within the country’s corporate sector. As the investigation progresses, it will likely scrutinize the intricacies of Kakao’s business practices and the broader implications for corporate governance in South Korea.
Kakao Corp., renowned for its immensely popular local mobile chat application Kakao Talk, has leveraged the widespread adoption of its messenger service to diversify into various sectors in recent years. Originally known for Kakao Talk’s success, Kakao Corp. has expanded its footprint into banking, online shopping, and numerous other services. This strategic expansion beyond messaging has enabled Kakao to establish a robust presence across multiple facets of the digital economy in South Korea. Through innovative ventures and leveraging its extensive user base, Kakao continues to evolve and solidify its position as a key player in the technology and digital services landscape.
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