South Korean billionaire and tech mogul Kim Beom-su was arrested Tuesday on allegations of manipulating the stock of a major K-pop firm SM Entertainment, in which his company Kakao gained a controlling stake last year.
Kakao currently owns a controlling stake in K-Pop firm SM Entertainment.
According to Yonhap News Agency, the Seoul Southern District Court issued the arrest warrant against Kim after a hearing where it concluded he was a flight risk and could potentially destroy evidence.
In a statement to the press last week, Kakao said Kim had informed the company in a meeting that the allegations were untrue and “have never instructed or condoned any illegal acts.”
The case against Kim is tied to his company Kakao’s controlling stake in the K-pop label and management firm, SM Entertainment, which it gained after winning a bidding war last year against Hybe—the parent company of BigHit which manages BTS.
Kim and other Kakao executives have been accused of artificially driving up SM Entertainment’s share price beyond $86.50 (KRW 120,000)—the set price at which Hybe was buying shares from the label’s investors, Yonhap reported.
The South Korean tech giant allegedly bought around $173 million (KRW 240 billion) worth of SM’s shares at artificially inflated prices to scuttle Hybe’s takeover attempt.
Kakao’s shares are down 5.12% to $28.11 (KRW 38,950) in late afternoon trading in Korea on Tuesday.
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40.28%. That is the combined percentage of SM Entertainment’s shares held by Kakao and its subsidiary Kakao Entertainment. Kakao is the largest holder with 20.97% of the shares, while Kakao Entertainment holds 19.31%. Hybe still holds 12.58% of SM Entertainment’s shares.
According to our estimates, Kim Beom-su's current net worth stands at $3.3 billion, putting him just one rank short of making the list of the world’s 1,000 richest people. Kim placed sixth on Forbes’ list of the richest Koreans in April, but his fortune at the time stood at $4.5 billion