South Korean prosecutors have demanded a 15-year prison sentence and a 500 million won fine for Kim Beom-su, the founder of tech giant Kakao, following allegations that he orchestrated a stock manipulation scheme during the company’s acquisition of SM Entertainment.
The sentence request, made at the Seoul Southern District Court presided over by Judge Yang Hwan-seung, represents the maximum legal penalty for violations under the Capital Markets Act.
The case stems from a fierce bidding war in February 2023, when Kakao allegedly manipulated SM Entertainment’s stock price to outmaneuver rival HYBE.
Prosecutors claim Kim directed a sophisticated scheme involving approximately 240 billion won (roughly $172 million) funneled through more than 300 individual transactions. These coordinated purchases artificially inflated SM’s share price from about 75,000 won to over 147,000 won, effectively blocking HYBE’s tender offer capped at 120,000 won per share.
Prosecutors argue Kim was “the most culpable” figure in the case, actively approving the manipulation despite lacking legitimate competitive qualifications.
“The defendants were motivated by greed to gain control of SM Entertainment without public criticism,” prosecutors stated, emphasizing the need for strict punishment to restore fairness in South Korea’s capital markets.
Six co-defendants face proposed prison terms ranging from 7 to 12 years, including former Kakao CIO Bae Jae-hyun (12 years), ex-Kakao Entertainment CEO Kim Sung-soo (9 years), and former Kakao CEO Hong Eun-taek (7 years).
One Asia Partners executive Ji Chang-bae faces a proposed 10-year sentence and 500 million won fine, while Kakao and Kakao Entertainment could each be fined 500 million won.
Kim was previously arrested but later released on bail during the ongoing investigation, highlighting the serious nature of the charges against him.
Following the alleged manipulation, Kakao successfully acquired a 39.9% stake in SM Entertainment.
The total purchases by Kakao entities and One Asia Partners reportedly exceeded 2.4 trillion won across hundreds of transactions.
Kim has consistently denied all allegations, maintaining he never ordered or condoned illegal stock manipulation. His defense team has presented counterarguments that the stock purchases were legitimate business transactions and not intended to block HYBE’s tender offer.
The controversy threatens SM Entertainment’s ability to effectively monetize their music catalog, which typically relies on proper royalty collection through various performance rights organizations.
The acquisition controversy could severely impact SM Entertainment artists, who rely heavily on sync deals and other revenue streams during this period of corporate uncertainty.
The trial concluded with prosecutors making their final sentencing request on August 29, 2025, in a case widely seen as highly influential for South Korea’s business and technology sectors.
