- Kakao’s founder, Kim Beom-su, was arrested on suspicion of stock manipulation during the acquisition of a K-pop agency last year.
- Kim Beom-su is Kakao’s largest shareholder with a 24% stake. If convicted of financial crimes, he will not be able to own more than 10% of the bank.
OUR TAKE
The arrest of Kim Beom-su for alleged stock manipulation during the acquisition of the K-pop organisation can have a negative impact on Kakao’s investments in AI and overseas expansion plans.
-Rae Li, BTW reporter
What happened
Kim Beom-su, the founder and largest shareholder of Kakao, has been arrested for alleged stock manipulation during the acquisition of a K-Pop agency last year. South Korean prosecutors accused him of interfering with SM Entertainment’s share price through illegal means in February 2022 to prevent rival company Hybe from acquiring the agency. Kim Beom-su denied the charges and said he never engaged in any illegal activities.
Nonetheless, the Southern Seoul District Court approved the arrest warrant, citing reasons such as preventing evidence from being tampered with and considering the risk of Kim Beom-su absconding.
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Why it’s important
The incident has significant implications for Kakao which plans to launch a new AI service this year but is currently facing regulatory scrutiny. It will make it more difficult for the company to make major investment decisions.
In addition, if Kim Beom-su is convicted of financial crimes, he will not be able to own more than 10% of the bank which could affect his control over Kakao’s online bank, KakaoBank. Also, Kakao’s shares fell 3.4% after news of Kim Beom-su’s arrest, showing the market’s sensitive reaction to the incident.
