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Founder of South Korean tech giant Kakao arrested for stock price manipulation – 104.5 WOKV

Theo

SEOUL, South Korea — (AP) — South Korean prosecutors said Tuesday they have arrested the founder of technology giant Kakao Corp. on suspicion of stock price manipulation during his company’s acquisition of 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.

According to prosecutors, Kim is accused of having arranged and approved a collaboration with the operator of a private equity fund to deliberately inflate the share price of the K-pop agency SM Entertainment and thus prevent Hybe Corp., the parent company of another K-pop heavyweight behind global sensation BTS, from buying SM Entertainment.

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

Another cocoa manager and the head of the equity fund have already been charged in this case, the public prosecutor’s office said.

Kakao Corp. is best known for its hugely popular free mobile chat app called Kakao Talk. It reportedly had around 41 million active users as of December in South Korea, a country of 52 million people. The company has used the popularity of its mobile messenger in recent years to expand its offerings to include banking, online shopping, gaming and other services.

Kakao Corp. said in a statement on Tuesday that “the current situation is regrettable.” The company said it would work to minimize the management gap but did not directly address Kim’s arrest.

Kakao’s share price fell more than 5% on Tuesday.

SM Entertainment’s 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”.

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