Founder of South Korean company Kakao arrested for alleged stock price manipulation | Technology News

Kim Beom-su is accused of participating in a conspiracy to inflate SM Entertainment’s share price to prevent a takeover by a rival agency.

The founder of South Korea’s Kakao Corp. was arrested on suspicion of manipulating the technology giant’s share price during its takeover of K-pop group SM Entertainment.

The southern Seoul District Court issued an arrest warrant for Kim Beom-su on Tuesday on the grounds that he might try to flee or destroy evidence.

South Korean prosecutors accuse Kim, also known as Brian Kim, of working with a private equity fund to buy about 240 billion won ($173 million) worth of shares to boost SM Entertainment’s share price and prevent a takeover by rival entertainment agency Hybe Corp.

Hybe withdrew an offer to buy a 14.8 percent stake in SM Entertainment after the company’s share price soared, allowing Kakao and its subsidiary to secure a nearly 40 percent stake in the K-pop agency.

Last year, South Korean prosecutors filed charges against Kakao’s chief investment officer Bae Jae-hyun in connection with the alleged stock manipulation scheme.

Kim, who can be detained for up to 20 days before prosecutors must decide whether to press charges, has denied any wrongdoing and no formal charges have been brought against him.

Kim, 58, is considered one of South Korea’s most visionary tech founders and launched the country’s most popular messaging app, KakaoTalk, in 2010.

Since then, Kakao has grown into a massive corporate empire valued at more than $12 billion, with a business portfolio ranging from taxi-hailing services to online banking and online shopping to entertainment management and merchandise stores.

Shares of Kakao, which plans to launch new artificial intelligence services this year, fell more than five percent following news of Kim’s arrest.