South Korean prosecutors have arrested the founder of technology giant Kakao Corp. for alleged stock price rigging during the company's takeover of a major K-pop agency last year. The arrest came after the Seoul Southern District Court approved an arrest warrant, citing concerns of potential flight or evidence tampering.
The founder, aged 58, faces accusations of orchestrating schemes to manipulate the stock price of K-pop agency SM Entertainment to prevent a rival company from acquiring it. Kakao Corp., known for its popular mobile chat app Kakao Talk, has diversified into banking and online shopping in recent years.
Prosecutors have up to 20 days to investigate the founder and decide whether to indict him. The founder has denied the allegations, as per the Seoul prosecutors' office.
Following the news of the arrest, Kakao's stock price dropped nearly 5% on Tuesday. SM Entertainment's top executives had opposed the acquisition attempts by the rival company, citing concerns of industry monopolization and increased costs for fans.
SM executives viewed Kakao's tender offer as a friendly gesture and considered the technology firm as an optimal strategic partner. The situation highlights the complex dynamics within the K-pop industry and the competitive landscape among major players.
