The appeals trial began for Kakao (035720) founder and Future Initiative Center head Kim Beom-su, who was acquitted in the first trial on charges of stock price manipulation during the acquisition of SM Entertainment.
The Seoul High Court's Criminal Division 4-1 (Presiding Judge Kim In-gyeom) held a pretrial hearing on April 20 for Kim, former Kakao Investment Head Bae Jae-hyun, Kakao Corporation, and Kakao Entertainment, all indicted for violating the Financial Investment Services and Capital Markets Act. As pretrial hearings do not require defendant attendance, Kim did not appear in court.
Defense attorneys for Kim and Kakao reiterated that there was no intent to manipulate stock prices. "There were no discussions aimed at blocking the tender offer," the defense stated. "The stock price already exceeded 120,000 won at the time of purchase. The tender offer was expected to fail, and this was simply regular market buying."
Prosecutors countered that "the expression 'blocking the tender offer' was used numerous times" and that "market manipulation was ultimately chosen after discussing various methods."
The court noted that "even a single transaction can constitute market manipulation if it involves artificial manipulation" and said it would review relevant precedents.
The appellate court identified key issues: whether intent to manipulate existed, whether artificial price manipulation occurred, whether Kakao and One Asia Partners colluded, and whether the trading patterns were illegal. The next pretrial hearing is scheduled for May 8, with approximately four trial sessions planned before sentencing.
Kim was indicted for allegedly manipulating SM Entertainment's stock price during rival Hybe's tender offer in February 2023. He allegedly accumulated approximately 240 billion won worth of SM Entertainment shares through 553 transactions to keep the price above Hybe's tender offer price of 120,000 won. He also faces charges of failing to report large shareholdings by concealing One Asia Partners' 8.16% stake.
The first trial court acquitted Kim in October last year, finding key witness testimony lacked credibility. The court also ruled that Kakao's large-scale market purchases alone during Hybe's tender offer period did not constitute stock manipulation.