Bae Jae-hyun, the chief investment officer of tech giant Kakao Corp., heads to the Seoul Southern District Court on Oct. 18, 2023, for a hearing. (Image courtesy of Yonhap)
SEOUL, Oct. 19 (Korea Bizwire) — The chief investment officer of Kakao Corp. was arrested Thursday on suspected stock manipulation in connection with the tech giant’s acquisition of SM Entertainment.
The Seoul Southern District Court issued an arrest warrant for the Kakao executive, Bae Jae-hyun, citing concerns about the possible destruction of evidence and flight risk.
Bae has been accused of stock manipulation in the bidding war Kakao had against Hybe, the parent company for K-pop superband BTS’ management agency BigHit, to acquire a major share in another K-pop powerhouse SM Entertainment in February.
After acquiring a 14.8 percent stake in SM from its founder Lee Su-man, Hybe had offered to buy up SM stocks from small shareholders at 120,000 won (US$88.51) per share. However, it later suspended its takeover bid when the market prices of SM shares significantly exceeded the offered price.
In March, Kakao and its subsidiary Kakao Entertainment together secured nearly a 40 percent stake in SM, clinching management control of the K-pop label.
The Financial Supervisory Service, the financial market watchdog, suspects Bae and two other Kakao executives of inflating SM shares’ prices by investing nearly 240 billion won to surpass the tender offer price set by their takeover rival, Hybe.
They have also been accused of omitting the compulsory declaration on their stock acquisition.
Bae has rejected stock manipulation suspicions, insisting in a statement last week that the acquisition was conducted “legally inside the market.”
(Yonhap)
