A South Korean court began reviewing a request on Monday, July 22, from prosecutors seeking an arrest warrant for Brian Kim, the billionaire founder of tech giant Kakao Corp.
According to Reuters, Kim faces accusations of stock manipulation related to a 2023 acquisition involving SM Entertainment, a leading K-Pop agency.
Prosecutors allege that Kim manipulated the stock price of SM Entertainment in February 2023 to obstruct rival Hybe from acquiring the agency. This may have involved illegal actions such as spreading false information or executing trades designed to distort the stock's value, thereby misleading investors and interfering with market dynamics.
By influencing the stock price, Kim is undermining fair market competition and violate securities laws designed to ensure transparent and equitable trading practices.
Brian Kim's Case on Kakao
This case represents a new legal challenge for Kakao, which, along with one of its executives, faced trial last year for alleged misconduct during the same acquisition process.
Kim, who has not yet been formally charged, has denied any wrongdoing, asserting through his company that he has never engaged in or condoned illegal activities.
The court's decision, expected late Monday or early Tuesday, will determine whether the arrest warrant is justified but will not address the prosecution's claims directly.
Analysts warn that a conviction could impact Kakao's control over its online banking subsidiary, KakaoBank, as financial regulations prohibit those convicted of financial crimes from holding stakes in banks.
Additionally, ongoing legal and regulatory scrutiny could prevent Kakao's strategic decisions, including investments in artificial intelligence and potential fundraising activities for its affiliates.
Join the Conversation