South Korean court clears Kakao founder of stock manipulation charges

[SEOUL] A South Korean court on Tuesday (Oct 21) cleared Kakao Corp’s billionaire founder Kim Beom Su of stock manipulation charges, sending shares of the country’s dominant chat app operator 5 per cent higher.

The Seoul Southern District Court said prosecutors did not provide sufficient evidence for their allegations and acquitted Kim of the charges.

The panel of three judges said it is difficult to conclude that Kakao’s purchase of SM shares was aimed at manipulating the market. The verdict was read out after a hearing that lasted a little over half an hour.

The tech tycoon was arrested in July last year on charges of being involved in manipulation of the stock price of SM Entertainment in 2023 to hinder a competitor, Hybe, from acquiring it. He was released on bail in October 2024.

In August, prosecutors had sought a 15-year jail term and a fine of 500 million won (S$453,200).

Kim thanked the court for the ruling and said, “I hope this serves as an opportunity for Kakao to move, even slightly, out of the shadow of (the allegations) of stock price and market manipulation.”

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Kim shot to fame in South Korea’s digital industry for building Kakao’s group of affiliates - worth 94 trillion Korean won by assets - from the ground up since launching the popular messaging app KakaoTalk in 2010.

Kakao, led by chief executive officer Shina Chung, is South Korea’s biggest messaging app used by nearly 50 million Koreans, with businesses ranging from gaming, shopping to banking to taxi-hailing.

The company’s shares were trading up 5.1 per cent after the court’s ruling.

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“The case will likely proceed to the Supreme Court, but today’s ruling can be seen as easing legal risks to some extent as Kim was cleared of all charges,” said Kim Dong Woo, an analyst at Kyobo Securities.

The outcome of the case against Kim could have jeopardised Kakao’s control of online bank arm KakaoBank, since the country’s financial rules restrict those convicted of financial crime from owning more than a 10 per cent stake in a bank.

The high-profile tech entrepreneur is the largest shareholder of Kakao Corp, with a 24 per cent stake that he and affiliated entities control.

Kakao was not immediately available for a comment on the ruling. REUTERS, BLOOMBERG