Court: “Hard to See as Price Manipulation”… Prosecutors Demand 15-Year Sentence, 
Kakao founder Kim Beom-su leaves Seoul Southern District Court on the 21st after being acquitted in the first trial regarding allegations of stock manipulation of SM. Photo by Park Hyung-gi.,
“In the case where Kim Beom-su, the founder of Kakao, was tried for allegedly manipulating SM’s stock prices to hinder competitor HYBE in the bid to acquire SM Entertainment, he was acquitted in the first trial.”,
“On the morning of this day at 11 AM, the Seoul Southern District Court’s Criminal Division 15 (Chief Judge Yang Hwan-seung) acquitted Kim of charges violating the Capital Markets Act.”,
“In February 2023, Kakao and HYBE engaged in a financial battle worth over 1 trillion KRW to acquire SM. Lee Soo-man, the then-founder of SM (former general producer), announced his retirement, and HYBE, led by Chairman Bang Si-hyuk, publicly declared its intention to purchase approximately 80% of Lee’s SM shares, which represented 14.8% of the entire SM stock.”,
“On February 9 of the same year, SM’s stock price was 98,500 KRW per share, and HYBE’s public purchase price was 120,000 KRW. Kakao entered the scene, and SM’s stock price suddenly soared.”,
“SM’s stock rose to 131,900 KRW per share by February 16 and 158,200 KRW by March 8. Eventually, HYBE failed to acquire SM, and Kakao took over. Subsequently, HYBE requested the Financial Supervisory Service to investigate the background of SM’s soaring stock prices, leading to a prosecution of Kim and others.”,
“The first trial court found no intention of price manipulation or conspiracy with Kakao between Kim and others.”,
“The court stated that merely affecting the stock price by purchasing SM stocks in large quantities during the public purchase period cannot be conclusively deemed as price manipulation. It emphasized the need to comprehensively assess whether deceptive methods were used, aligning with the purpose of punishing price manipulation.”,
“The court deemed the testimony of Lee Junho, former Head of Investment Strategy at Kakao Entertainment, who claimed there was a conspiracy with Kim, unreliable. As a key testimony and essentially the only evidence presented by the prosecution, the court found the claim of overhearing a phone conversation discussing price manipulation on speakerphone unusual and hard to accept given the content and nature of the conversation.”,
“Previously, Lee claimed he had switched his smartphone to speakerphone mode, connecting a call between Bae Jae-hyun, former Head of Investment at Kakao, and Ji Chang-bae, CEO of One Asia Partners, which lasted about 27 minutes. The prosecution argued this call showed a conspiracy between Kakao and One Asia. However, the court judged that Lee had motive or reason to retract his earlier statements about Kakao’s purchase and conform to investigatory purposes to avoid being a target.”,
“Regarding whether One Asia conspired with Kakao to manipulate SM’s stock prices, the court stated that the evidence presented by the prosecution didn’t sufficiently establish a purpose of price manipulation or conspiracy with Kakao. It found the characteristics of One Asia’s purchase orders notably different from those typical of manipulative trades.”,
“As for Kim’s statement to “bring it peacefully,” the court noted that relevant investors testified they never heard such remarks and doubted whether Kim said it that way, suggesting room for interpreting it as meaning to ‘find a peaceful resolution to the dispute with HYBE.'”,
“The court also found no intent or purpose of price manipulation by Bae, who had led the operations at Kakao. Referring to a call between Bae and Kang Ho-joong, former Head of Investment Strategy at Kakao, the court noted that if the purpose was to thwart HYBE’s purchase, the call should have contained phrases like ‘let’s make HYBE’s public purchase fail’ or ‘let’s push the market price above HYBE’s public offer of 120,000 KRW.’ However, the court noted that the recordings submitted contained none of these.”,
“Previously, in the closing arguments for Kim’s case in August, the prosecutors had requested a sentence of 15 years in prison and a 500 million KRW fine.”,
“At that time, the prosecution also requested 12 years for Bae, 10 years for Ji, 9 years for Kim Seong-soo, former CEO of Kakao Entertainment, and 7 years each for former Kakao CEOs Hong Eun-taek, Kang, and Kim Tae-young, former Vice CEO of Asia Partners.”,
“During the final plea, Kim’s side argued that they had never undertaken affairs or made compromises through unlawful means while running Kakao. They stated that while listening to opinions of competing at the same level with HYBE to secure comparable shares, they merely didn’t oppose acquiring some shares but never consented to acquiring SM Entertainment.”