A South Korean court on Tuesday dropped charges against Kakao’s billionaire founder, Kim Beom-sum, of stock manipulation charges. The news sent the shares of the country’s dominant chat app operator nearly 6% higher to 62,300 KRW.
South Korean authorities arrested Kim in July last year on charges of being involved in the stock price manipulation of SM Entertainment in 2023. Kim was alleged to have manipulated the company’s share price to hinder a competitor, Hybe, from acquiring it.
Kim’s case proceeds to the Supreme Court
Kim was released on bail in October last year. Prosecutors had threatened in August to grant the tech tycoon a 15-year jail term and a fine of 500 million won ($350,000).
Kim has pioneered South Korea’s digital sector with the establishment of Kakao’s group of affiliates, which are currently worth around 94 trillion Korean won ($66.13 billion) in assets. The tech tycoon has grown the company from the ground up since launching the popular messaging app Kakao Talk in 2010.
The app has grown to become South Korea’s biggest messaging app, with nearly 50 million Korean users. Kakao also has businesses ranging from gaming, shopping, to banking, and taxi-hailing.
Reuters reported that Kim Dong-woo, an analyst at Kyobo Securities, acknowledged that the case will likely proceed to the Supreme Court. He also believes that today’s ruling can be seen as easing legal risks to some extent, as Kim was cleared of all charges.
The case’s potential outcome against Kim could have jeopardized Kakao’s control of its online bank arm, KakaoBank. South Korea’s financial rules restrict those convicted of financial crime from owning more than a 10% stake in a bank. Kim is currently the largest shareholder of Kakao Corp, with a 24% stake that he and affiliated entities control.
At the time, Seoul Southern District Court brought charges against Kim to prevent the potential destruction of evidence, alleging that Kim was a flight risk. Kakao and another executive also went on trial in 2022 after being accused of wrongdoing during the acquisition of a K-pop agency.
Seoul financial authorities catch individuals in massive stock manipulation
South Korea’s financial authorities said in September that super-rich individuals have been caught colluding with financial professionals to carry out large-scale stock manipulation. The agency found that the individuals allegedly mobilized around 100 billion won ($72 million) for market-rigging schemes, which earned them around 40 billion won in illicit profits.
The financial authorities were referring to a case handled by the joint task force against stock manipulation, launched in July and comprised officials from the Financial Service Commission (FSC), the Financial Supervisory Service (FSS), and the Korea Exchange. The task force follows President Lee Jae Myung’s efforts to detect and investigate illegal and unfair stock trading activities.
The task force revealed that South Korean authorities raided 10 locations, including the residences and offices of seven individuals who manipulated stock prices over an extended period using substantial funds. According to the task force, the suspects comprised wealth owners of general hospitals, oriental medicine clinics, and private academies, as well as a bank branch manager, a former senior private equity fund official, and an asset management executive.
The financial authorities accused the suspects of mobilizing more than 100 billion won in funds, sourced from corporate capital and bank loans. The authorities suspect the individuals used tactics such as inflated buying and wash trades to lure investors over the past 21 months.
The individuals also allegedly placed more than 10,000 sham and collusive orders, which are estimated at 40 billion won, with realized trading profits from illegal gains totaling 23 billion won. Lee Seung-woo, deputy vice governor of the FSS and task force head, hinted that the number of suspects and the scope of the case could expand further.
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Source: https://www.cryptopolitan.com/kakao-founder-wins-legal-battle/
