Prosecutors have requested arrest warrants for Kakao executives and employees over alleged stock manipulation during an acquisition of SM Entertainment.
According to the Financial Supervisory Service and the Seoul Southern District Prosecutors Office on October 13, prosecution requested arrest warrants for Kakao's investment representative, the head of the investment strategy office, and the head of Kakao Entertainment's investment strategy division. Reports say those charged allegedly interfered with an offer from HYBE, which was competing to acquire SM Entertainment, by manipulating stock prices.
This past February, HYBE made a public offer for SM Entertainment stocks in the amount of 120,000 Won ($88.96 USD) for each stock. The Financial Supervisory Service is now asserting Kakao invested 240 billion Won ($177,922,080.00 USD) to prevent the offer from moving through, which violates the Capital Markets Act. Kakao also did not disclose the stock holdings during the process, which violates the same law.
The reports are bad news for Kakao, which is facing sluggish performance and stock prices. A securities firm expert stated, "We cannot predict the outcome of the trial, but if it's found that SM shares were acquired unfairly, it could be a huge blow to Kakao Entertainment."
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