South Korean Tech Billionaire Arrested After Allegedly Manipulating K-Pop Firm’s Stock
In a dramatic turn of events, South Korean billionaire and tech mogul Kim Beom-su, also known as Brian Kim, was arrested Tuesday on allegations of manipulating the stock of a major K-pop firm, SM Entertainment. Kim, the founder of Kakao Corp., a tech giant, faces serious charges that could have far-reaching implications for the industry.
Kim Beom-su was taken into custody by South Korean authorities after the Seoul Southern District Court issued an arrest warrant. The court cited concerns that Kim posed a flight risk and could potentially destroy evidence. This arrest follows intense scrutiny over Kakao's acquisition of a controlling stake in SM Entertainment last year, after a fierce bidding war with Hybe, the parent company of BigHit, which manages the global sensation BTS.
The Alleged Manipulation
The case against Kim centers on accusations that Kakao executives, under his direction, artificially inflated the share price of SM Entertainment to thwart Hybe's takeover attempt. Reports suggest that Kakao purchased around $173 million (KRW 240 billion) worth of SM's shares at inflated prices, driving the share price beyond $86.50 (KRW 120,000)—the price Hybe was buying shares from SM Entertainment's investors.
Kakao's controversial actions allegedly aimed to secure their dominance over SM Entertainment, a significant player in the K-pop industry. As a result, Kakao now holds a combined 40.28% of SM Entertainment’s shares through Kakao and its subsidiary, Kakao Entertainment.
Following Kim's arrest, Kakao's shares fell by 5.12% to $28.11 (KRW 38,950) in late afternoon trading in Korea on Tuesday. The market reacted swiftly to the news, reflecting concerns over the company's future amidst the unfolding legal battle. In a statement released last week, Kakao defended Kim, stating that he had informed the company in a meeting that the allegations were untrue and that he had "never instructed or condoned any illegal acts."
Kim Beom-su's Legacy
Brian Kim, a prominent figure in South Korea's tech industry, founded Kakao as a messaging app. Over time, it evolved into a super app, akin to China's WeChat, offering services ranging from texting and online groups to payments, grocery orders, and taxi hailing. Kakao's subsidiary, Kakao Entertainment, formed in 2021, manages multiple TV, film, music, and webtoon comics studios and operates South Korea’s largest music streaming service, Melon.
Kim's business acumen has earned him significant wealth. Forbes estimates his net worth at $3.3 billion, ranking him among the wealthiest individuals in Korea. However, his fortune has seen fluctuations; in April, he was listed sixth among Korea's richest with a net worth of $4.5 billion.
The arrest of Kim Beom-su underscores the intense competition and high stakes within South Korea's entertainment and tech industries. It also raises questions about corporate governance and the ethical boundaries of business practices in the country. As the legal proceedings unfold, the implications for Kakao and the broader market remain uncertain. However, the case has already highlighted the complex interplay between technology, entertainment, and finance in shaping the future of South Korea's economy.
