Tech Giant Kakao Corp Founder Arrested for Stock Manipulation
South Korean prosecutors announced on Tuesday that they had arrested the founder of tech giant Kakao Corp. for allegedly manipulating stock prices during the company’s acquisition of a major K-pop agency last year. The founder, Kim, was arrested after the Seoul Southern District Court approved an arrest warrant over concerns that he might flee or destroy evidence.
Stock Manipulation Allegations
The prosecutors have accused Kim of orchestrating and approving a plan to work with private equity fund operators to manipulate the stock price of K-pop outfit SM Entertainment. The goal was to prevent Hybe Corp., the company behind global sensation BTS, from acquiring SM Entertainment. Kim, 58, denies these charges, according to the Seoul prosecutor’s office.
As a result of the allegations, Kakao shares fell nearly 5% on Tuesday. This incident has cast a shadow over the reputation of the tech giant, known for its popular mobile chat application Kakao Talk.
Industry Response and Impact
Executives at SM Entertainment opposed Hybe’s attempt to increase ownership of the company, labeling it as a hostile takeover that could lead to an industry monopoly and increased costs for fans. They also expressed concerns that SM artists may not receive prioritization under Hybe’s control.
On the other hand, senior SM executives backed Kakao’s takeover bid, describing it as a “friendly” offer and highlighting the technology company as the “best strategic partner” for SM Entertainment.
These conflicting stances within the industry have created uncertainty and raised questions about the future direction of K-pop agencies and their collaborations with major corporations.
Conclusion
The arrest of Kakao Corp.’s founder highlights the complex dynamics at play in the entertainment and technology industries in South Korea. It serves as a reminder of the challenges and controversies surrounding corporate acquisitions and stock manipulation in the competitive world of K-pop.
As the investigation unfolds and more details emerge, the repercussions of these events on the industry and the companies involved remain to be seen.
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