South Korean authorities arrested Kakao Corp.’s chief investment officer for alleged stock price manipulation in a high-profile takeover battle over K-pop agency SM Entertainment Co.
Chief Investment Officer Bae Jae-hyun was arrested early Thursday, according to the Seoul Southern District Court which issued the warrant.
Internet giant Kakao won a controlling stake in SM after an intense bidding war with Hybe Co., the label behind hit boy band BTS. Financial regulators accused the executive, along with two others working at Kakao and Kakao Entertainment Corp., of buying 240 billion won ($178 million) in shares of SM in an attempt to disrupt a Hybe’s tender. The court has not issued warrants for the other two people, and it was unclear whether there could be more arrests.
Both Kakao and Hybe had seen ownership of SM as a way to reach a broader audience and to drive Korean entertainment acts into the mainstream, and their bidding war sent SM’s stock price to a record. Hybe backed down from its takeover bid in March.
The lawyer representing Kakao executives, who previously said the purchase of SM shares was a legitimate market transaction, was not immediately available for comment. Kakao officials were not immediately available for comment.
Shares in Kakao fell around 2% in morning trade, down around 23% from the start of the year. Shares in SM were down over 2%, but still up 54% so far this year.
