Founder of South Korea’s Kakao arrested over alleged stock price rigging

The founder of South Korea’s Kakao Corp has been arrested on suspicion of rigging the tech giant’s stock price during its acquisition of K-pop juggernaut SM Entertainment.
Seoul Southern District Court issued the arrest warrant for Kim Beom-su on Tuesday, citing the possibility he could try to flee or destroy evidence.
South Korean prosecutors have accused Kim, also known as Brian Kim, of colluding with a private equity fund to buy some 240 billion won ($173m) worth of shares to inflate SM Entertainment’s stock price and prevent its takeover by rival entertainment agency Hybe Corp.
Hybe withdrew an offer to buy a 14.8 percent stake in SM Entertainment after the company’s stock price soared, allowing Kakao and its subsidiary to secure a nearly 40 percent stake in the K-pop agency.
South Korean prosecutors last year indicted Kakao’s Chief Investment Officer Bae Jae-hyun in relation to the alleged stock manipulation scheme.
Kim, who can be detained for up to 20 days before prosecutors must decide whether to indict him, has denied any wrongdoing and has not been formally charged.
Widely viewed as one of South Korea’s most visionary tech founders, Kim, 58, launched the country’s most popular messaging app, KakaoTalk, in 2010.
Since then, Kakao has evolved into a sprawling corporate empire valued at more than $12bn, with a business portfolio spanning taxi-hailing services, online banking, online shopping, entertainment management and merchandise stores.
Shares of Kakao, which is planning to introduce new artificial intelligence services this year, dropped more than 5 percent following the news of Kim’s arrest.