South Korean authorities yesterday arrested Kim Beom-su, the billionaire founder of tech giant Kakao Corp, on suspicion of manipulating stocks during the acquisition of a K-pop agency last year.
It is the latest legal twist for Kakao, which runs South Korea’s largest chat app, after the company and another executive went on trial last year, accused of wrongdoing during the acquisition.
Kim, also known as Brian Kim, is seen as a visionary in South Korea’s digital industry for building the Kakao group from the ground up. The firm’s assets are worth 86 trillion won (US$62 billion).
Photo: Yonhap via AP
Prosecutors said that Kim was involved in manipulating the stock price of SM Entertainment Co in February last year to prevent a competitor, Hybe Co, from acquiring it.
In a statement, Kakao called the situation “unfortunate,” adding that Kakao CEO Shina Chung, would lead efforts to minimize the effects of any potential management vacuum.
Kim has denied the accusations, saying he has never ordered or tolerated any illegal activity, the company said in a statement.
He has not yet been formally charged.
The high-profile tech entrepreneur is the largest shareholder of Kakao, with a 24 percent stake that he and affiliated entities control.
The Seoul Southern District Court approved the arrest warrant to prevent the potential destruction of evidence and because Kim was a flight risk, a court official said.
Kim is being held at the Seoul Nambu Detention Center, a spokesperson for the prosecution said.
His arrest would last up to 20 days, during which time prosecutors would investigate further before deciding whether to charge him, according to South Korean criminal procedure.
The outcome of any case against Kim could jeopardize the Kakao’s control of online bank arm KakaoBank Corp, as the country’s financial rules restrict those convicted of financial crime from owning a stake of more than 10 percent in a bank.
Kakao is also likely to face regulatory scrutiny, making it harder for it to make major decisions on investments in artificial intelligence and overseas business expansion, industry experts said.
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