Kakao: SM Entertainment share-price case, founder's arrest, 2025 acquittal and pending appeal
Kakao: SM Entertainment share-price case, founder's arrest, 2025 acquittal and pending appeal: a public-record watch file compiled by Falling Shares Intelligence from filings and exchange disclosures, as of 2026-11-09. In 2023 the Financial Supervisory Service referred Kakao, a subsidiary and executives to prosecutors over share purchases during HYBE's tender offer for SM Entertainment.
From a 2023 Financial Supervisory Service referral to the founder's 2024 arrest, his October 2025 acquittal and an appeal verdict due on 20 November 2026.
Falling Shares Intelligence, Edited by Wung Thomas, Editor-in-Chief. As of .
Summary
- In 2023 the Financial Supervisory Service referred Kakao, a subsidiary and executives to prosecutors over share purchases during HYBE's tender offer for SM Entertainment.
- Prosecutors arrested the founder in July 2024 and indicted him in August 2024; he and Kakao denied the allegations.
- The Seoul Southern District Court acquitted the founder, Kakao and Kakao Entertainment on 21 October 2025; prosecutors appealed, and the Seoul High Court is due to rule on 20 November 2026.
Key figures
| Alleged share orders | KRW 240bn (Prosecutors' allegation, rejected at first instance) |
|---|---|
| First-instance verdict | 21 Oct 2025 (All defendants acquitted) |
| Sentence sought | 15 years (Sought at first instance and again on appeal) |
| Appeal verdict due | 20 Nov 2026 (Seoul High Court, 10:20) |
Investigation, arrest and indictment
Financial Supervisory Service refers Kakao to prosecutors
The Financial Supervisory Service's special judicial police referred Kakao, Kakao Entertainment, a former chief investment officer and other executives to prosecutors on suspicion of breaching the Capital Markets Act. The allegation was that about KRW 240bn of SM Entertainment shares were bought above the open-market price HYBE had offered. The founder was not on the referral list. (26 Oct 2023)
Prosecutors seek an arrest warrant for the founder
The Seoul Southern District Prosecutors' Office applied for an arrest warrant for Kakao's founder, Kim Beom-su, about a week after questioning him. His lawyers said they regretted the request, and he denied the allegations. (17 Jul 2024)
Court issues the arrest warrant
The Seoul Southern District Court issued the warrant and the founder was detained, with the court citing a risk that he could flee or destroy evidence. Prosecutors then had 20 days to decide whether to charge him. (23 Jul 2024)
Founder indicted while in custody
Prosecutors indicted the founder for stock manipulation, alleging he was involved in manipulating SM Entertainment's share price in February 2023 to hinder HYBE's acquisition. Two former Kakao group chief executives were indicted without detention. Kakao said he had never ordered or tolerated any illegal activity. (8 Aug 2024)
Trial and first-instance acquittal
Founder released on bail; revocation bid fails
The founder was released on bail on 31 October 2024, about 100 days after detention. Prosecutors asked for the bail decision to be revoked in November 2024, and in December 2024 the court rejected that request, so the trial continued without detention. (31 Oct 2024; Dec 2024)
Founder, Kakao and Kakao Entertainment acquitted
The Seoul Southern District Court acquitted the founder, a former chief investment officer, Kakao and Kakao Entertainment of Capital Markets Act violations. The court found the evidence insufficient to prove collusion or an intent to rig prices and said Kakao's orders differed significantly in timing and method from typical manipulation. Prosecutors had sought 15 years in prison and a KRW 500m fine for the founder. (21 Oct 2025)
Appeal and current status
Prosecutors appeal the acquittal
Prosecutors appealed, arguing errors of fact and law in the first-instance ruling, including that the court overlooked evidence such as phone records. (28 Oct 2025)
Seoul High Court opens the appeal
At the first appeal hearing, prosecutors said the lower court failed to rule on a large body of evidence, challenged its rejection of a former Kakao Entertainment executive's testimony, and asked for HYBE's chairman to be called as a witness. The panel set out the key questions as whether the founder intended to manipulate prices and whether Kakao's purchases amounted to prohibited price-stabilising trades. (24 Jun 2026)
Prosecutors again seek 15 years; verdict date set
At the final appeal hearing, prosecutors again asked for 15 years in prison. The founder told the court he had never given an illegal order. The Seoul High Court set the verdict for 20 November 2026. (23 Sep 2026)
Standard
This file compiles court records as reported, prosecutor and regulator actions, company statements and published reporting about Kakao Corp.. Allegations are attributed to those who made them. An investigation is not a charge, a charge is not a finding, and nothing here is a finding of wrongdoing unless a competent authority has made one. Kakao and its founder deny the allegations; the Seoul Southern District Court acquitted them at first instance in October 2025, and the prosecution's appeal is pending. Individuals are not named unless an official document names them and they are central; otherwise roles are used. This is news coverage for information only, not investment advice.
Right of reply
Kakao Corp., and anyone named in a record cited here, can send corrections or comments to info@fallingshares.com (or directly to the Editor-in-Chief, Wung Thomas, at wungthomas@fallingshares.com). Material responses will be published alongside the relevant entry.