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South Korean prosecutors said Tuesday they have arrested the founder of technology giant Kakao Corp. for alleged stock price rigging during his company’s takeover of a major K-pop agency last year.
Kim’s arrest came after the Seoul Southern District Court approved an arrest warrant, citing concerns that he could flee or destroy evidence.
Prosecutors have up to 20 days to investigate Kim and determine whether to indict him, according to a senior prosecutor at a Seoul district prosecutors’ office. He requested anonymity because an investigation was under way.
Kim faces allegations that he orchestrated and approved schemes to collaborate with the operator of a private equity fund to manipulate the stock price of K-pop agency SM Entertainment to prevent Hybe Corp., the parent company of another K-pop powerhouse behind global sensation BTS, from buying SM Entertainment, according to the prosecutor.
Kim, 58, denied the allegations, according to the Seoul prosecutors' 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 used the popularity of its mobile messenger to branch into banking, online shopping and other services in recent years.
Kakao’s stock price fell nearly 5% on Tuesday.
SM Entertainment’s top executives had objected to Hybe’s attempt to increase ownership of the company, describing it as a hostile takeover attempt and saying it would lead to monopolization of the industry, pushing up costs for fans. It also said that SM artists might not be prioritized if Hybe controlled the firm.
SM’s top executives had supported Kakao’s tender offer as a “friendly” one, and described the technology firm as the “optimal strategic cooperative partner.”
