Prosecutors Seek 15-Year Prison Term for Kakao's Kim Beom-soo in Second Trial Over 'SM Stock-Price Manipulation'; Verdict Set for Nov. 20

[Financial News] Prosecutors have sought a 15-year prison sentence for Kakao founder Kim Beom-soo, head of the Future Initiative Center, in the appeal trial over charges that he colluded to manipulate SM Entertainment's stock price. The defense argued that prosecutors had presented no new arguments or evidence compared with the first trial, which found Kim not guilty, and maintained that he should again be acquitted.
The Seoul High Court's Criminal Division 4-1, comprising presiding judges Kim In-gyeom, Seong Ji-yong and Jeon Ji-won, held the final hearing on the appeal involving Kim and others, who face charges of violating the Act on the Capital Market and Financial Investment Business, on the 23rd.
Prosecutors sought a 15-year prison sentence and a fine of 500 million won for Kim. They also asked the court to order the forfeiture of 127.20638 billion won. After appealing the first-trial acquittal, prosecutors requested the same sentence as in the original trial.
Prosecutors sought a 12-year prison sentence for former Kakao Chief Investment Officer Bae Jae-hyun, who was indicted alongside Kim; a 10-year fine for One Asia Partners CEO Ji Chang-bae; and a nine-year prison sentence for former Kakao Entertainment CEO Kim Sung-soo. They also asked the court to impose a fine of 500 million won on each defendant. Depending on the defendant, they requested forfeiture ranging from 58.5 billion won to 127.20638 billion won.
Prosecutors also sought seven-year prison sentences and fines of 500 million won each for former Kakao CEO Hong Eun-taek, former Kakao investment strategy chief Kang Ho-jung and former One Asia Partners vice president Kim Tae-young. For Kakao, Kakao Entertainment and One Asia Partners, which were indicted under the dual-liability provision, prosecutors sought fines of 500 million won each.
Kim and the other defendants are accused of manipulating SM Entertainment's stock price during the acquisition process in February 2023 by setting and keeping it above HYBE's tender-offer price of 120,000 won, with the aim of blocking the tender offer by their competitor HYBE.
The prosecution said, "The first trial found that it could not recognize that Kim and the other defendants had discussed or colluded to block HYBE's tender offer for SM Entertainment or manipulate its stock price. However, acquiring SM Entertainment required blocking HYBE's tender offer as a necessary precondition, and they ultimately committed stock-price manipulation through large-scale on-market purchases on the final day to thwart the tender offer."
Prosecutors claimed that there was substantial objective evidence of both the intent to acquire SM Entertainment and stock-price manipulation. They presented as evidence a message referring to the "final two days, the watershed moment in the SM acquisition," as well as KakaoTalk messages mentioning "blocking the tender offer" around Kakao's investment meetings. Prosecutors also explained that on Feb. 28, 2023, when Kakao began accumulating shares and SM Entertainment's stock price fell below 120,000 won, there had been a clear instruction to "get it up to 120,300 won quickly."
The defense countered that prosecutors had merely framed a normal investment decision as an effort to "block the tender offer" and had no evidence to support their claims. It explained that the orders were normal purchases intended to build a stake comparable to HYBE's at a time when HYBE's tender offer was already considered to have failed.
One Asia Partners, the private equity fund accused of colluding in the stock-price manipulation, also argued that it had begun considering the acquisition of an SM Entertainment stake long before the period when it came under suspicion of manipulation. It said the transactions during the period identified by prosecutors involved purchasing shares at prices below the market price and therefore differed from artificial orders intended to establish a stock price of 120,000 won or more.
In his final statement, Kim stressed, "I was clearly opposed to additionally acquiring an SM Entertainment stake during the tender-offer period and openly competing with HYBE over their holdings. Rather, I only suggested finding an amicable solution through peace talks with HYBE. Even now, I have been unable to find specific evidence or circumstances showing when, where or to whom I instructed anyone to manipulate the stock price, or how I allegedly conspired."
The court is scheduled to deliver its appellate verdict on the morning of Nov. 20 after considering the arguments presented by both sides.
[email protected] Lee Chang-hoon Reporter