As Bae Jae-hyun, the head of Kakao’s investment division, who is suspected of manipulating SM Entertainment’s market price, has been arrested, the Financial Supervisory Service’s special law enforcement police plan to transfer Bae to the prosecution for further investigation.
On Oct. 19, the FSS stated, “Bae, who is facing allegations of violating the Capital Markets Act, has been detained due to significant concerns of flight and tampering with evidence. He is currently being held at the Yeongdeungpo Police Station, and the special law enforcement police plan to conduct the investigation while he is in custody, with the intention of transferring him to the prosecution within 10 days.”
Earlier, Kim Ji-sook, a senior judge in charge of warrants at the Seoul Southern District Court, issued an arrest warrant for Bae, following a pre-detention hearing, or substantive review of the warrant, stating, “There are concerns regarding the destruction of evidence and the risk of fleeing.”
Prior to this, the FSS’s special law enforcement police and the Seoul Southern District Prosecutor’s Office applied for arrest warrants against Bae and others on the suspicion of violating the Capital Markets Act on Oct. 13. The suspects are accused of manipulating SM Entertainment’s stock price above the price set by HYBE during the takeover battle in February this year, investing over 240 billion won (US$176.73 million) to obstruct HYBE’s public takeover. They have also been found not to have reported their substantial holdings of SM Entertainment shares.
Under the Capital Markets Act, if an individual and those in a special relationship with the individual collectively hold more than 5% of the total shares of a company, they are required to report the fact to the financial authorities within 5 business days.