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| Kakao Founder Brian Kim Arrested on Stock Manipulation Charges Amid SM Entertainment Takeover Image credit: TechCrunch |
Brian Kim, the founder of South Korea's internet powerhouse Kakao, was arrested on Tuesday on charges of stock price manipulation related to Kakao’s 2023 acquisition of K-pop agency SM Entertainment. The Seoul Southern District Court issued an arrest warrant after concerns arose about potential evidence destruction and flight risks. Kim faces up to 20 days in custody while prosecutors continue their investigation, which could impact Kakao’s operations and strategic AI initiatives, given Kim's pivotal role in the company.
Kim is accused of manipulating SM Entertainment's share price during a competitive bidding process with Hybe, the owner of the BigHit agency behind K-pop sensation BTS. Reports suggest Kakao purchased approximately KRW 240 billion ($174 million) in SM Entertainment shares over 553 transactions in February 2023, driving the share price beyond Hybe's offer and causing Hybe to withdraw its bid.
Kakao has denied the allegations, asserting that Kim did not authorize or condone any illegal activities. The company’s chief investment officer, Jae-Hyun Bae, was previously arrested in October on similar charges and is currently undergoing trial.
Kakao, established in 2006, is renowned for its KakaoTalk messaging app and has expanded into various sectors including transportation with Kakao Mobility, banking with Kakao Bank, and music streaming with Melon. The company has made 13 acquisitions from 2011 to 2022, with an average deal size of $546 million.
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