Founder of South Korean technology giant Kakao arrested in stock price manipulation case

SEOUL, South Korea (AP) — South Korean prosecutors said Tuesday they have charged the founder of technology giant Kakao Corp. with alleged stock price manipulation during the take over a major K-Pop agency last year.

Kim’s arrest came after the southern Seoul District Court issued an arrest warrant, citing fears that he might flee or destroy evidence.

Prosecutors have up to 20 days to investigate Kim and decide whether to press charges against him, a senior prosecutor at the Seoul District Prosecutors’ Office said, requesting anonymity because an investigation is ongoing.

Kim is accused of orchestrating and approving plans to work with the operator of a private equity fund to manipulate the stock price of K-pop agency SM Entertainment in order to prevent Hybe Corp., the parent company of another K-pop heavyweight behind the global sensation bts, from buying SM Entertainment, said the prosecutor.

Kim, 58, denied the allegations, according to the Seoul prosecutor’s office. He was not immediately available for comment.

Kakao Corp. is best known for its hugely popular local mobile chat app called Kakao Talk. The company has leveraged the popularity of its mobile messenger in recent years to branch out into banking, online shopping and other services.

Kakao’s share price fell nearly 5% on Tuesday.

SM Entertainment Top executives had objected to Hybe’s attempt to increase its stake in the company, calling it a hostile takeover attempt and saying it would lead to monopolization of the industry and increase costs for fans. They also said SM artists might not receive preferential treatment if Hybe controlled the company.

SM’s top managers had supported Kakao’s takeover offer as “friendly” and described the technology company as an “optimal strategic cooperation partner”.