The billionaire Kim Beom-soo of South Korea’s Kakao Corp. was detained on Tuesday and accused of fueling stocks during the acquisition of a K-Pop agency last year. The arrest warrant was granted by the Seoul Southern District Court as a measure to give pretrial protections an incentive to destroy evidence and apprehension of flight risk.
Kim, who also goes by Brian Kim, has been implicated for manipulating the SM Entertainment stock in February last year in an attempt to block competitor Hybe from buying the firm. He has dismissed all the allegations, saying he never directed or condoned any unlawful act.
The arrest of Kim with a 24 percent stake has a controlling block in Kakawa Corp. and has threatened the company’s investment in artificial intelligence and overseas expansion. They reckon the result of such a case may also come into play in Kakao’s management of the online bank arm, KakaoBank Corp., since rules in the financial sector do not allow members convicted of financial crime to own more than a 10% stake in a bank.
Kakao Corp. shares fell by 3. Year-to-date, films plummeted by 24% during morning trade and reached the lowest Fitch level since November at 4%. The firm expects to launch new AI services this year; however, threats from government regulation may limit big decisions on investment and expansion.
This new development constitutes the latest in a series of trials for Kakao, which operates the largest chat application in South Korea, after the firm and another executive were put on trial last year over mischief in the same acquisition. Kim’s apprehension will take up to 20 days to arrest, after which prosecutors will carry out another probe before arraigning
