Former Kakao Chairman Kim Beom-soo appeared before the Financial Supervisory Service (FSS) in connection with allegations of market manipulation involving SM Entertainment stock prices.
The FSS’ Capital Market Special Judicial Police have notified former Chairman Kim to attend the FSS as a suspect by 10 a.m. Oct. 24. On this day, dozens of reporters are gathering in front of the FSS’ main entrance.
Former Chairman Kim remains silent in response to reporters’ questions about whether he admitted the allegations or if he had instructed Bae Jae-hyun, the head of Kakao’s investment division, to manipulate stock prices. Instead, he made only a brief statement, saying, “I will cooperate earnestly with the investigation,” before quickly entering the elevator and leaving the lobby.
As the Special Judicial Police are known to have obtained audio recordings and text messages containing evidence of market manipulation from the mobile phones of Kakao executives, the investigation is expected to focus on whether former Chairman Kim was aware of or gave instructions regarding these actions. On Oct. 19, the Special Judicial Police had already arrested Kakao’s Chief Investment Officer, Bae Jae-hyun, on similar charges.
Kakao is under suspicion of intentionally boosted SM’s stock price by investing 240 billion won (US$177.65 million) during the competition for SM’s management rights with HYBE in February. Central to the investigation is the question of whether Kakao colluded with private equity fund management company One Asia Investment Partners. The “Helios 1st Limited Partnership,” in which One Asia and its fund invested, acquired a significant 2.9 percent stake in SM worth 80 billion won through IBK Securities’ Pangyo branch on Feb. 16.
The Special Judicial Police have reportedly gathered objective evidence pointing to several circumstances that may indicate a special relationship between Kakao and One Asia. If the court accepts this information, it could potentially result in Kakao violating capital market regulations as it would be required to disclose ownership of more than 5 percent of the shares.