[Alpha Biz= Paul Lee] The appeal trial has begun for Kakao founder Kim Beom-su, who was acquitted in the first trial on charges of stock price manipulation related to SM Entertainment.

The Seoul High Court (Criminal Division 4-1), presided over by Judge Kim In-gyeom, held the first pretrial hearing on March 20 for Kim, along with former Kakao investment chief Bae Jae-hyun, as well as Kakao Corp. and Kakao Entertainment, which were indicted under joint penalty provisions for alleged violations of the Capital Markets Act.

A pretrial hearing is a procedural session in which both sides present their positions and discuss evidentiary plans ahead of formal proceedings. The defendants were not required to appear in court and did not attend the hearing.

The defense argued that there was no intention to interfere with HYBE’s tender offer for SM Entertainment, stating that “there was no purpose of price manipulation, nor did the nature of the transactions indicate such intent.” The defense added that there had been no discussions about purchasing shares to block the tender offer.

Regarding the situation in February 2023, when HYBE launched its tender offer, the defense claimed that the offer was widely expected to fail, leading Kakao to purchase shares through regular market transactions rather than as part of any coordinated effort to disrupt the deal.

Prosecutors, however, countered that phrases implying an intent to “block the tender offer” were used among Kakao executives and employees responsible for group investment returns.

The court outlined key issues for the case, including whether the defendants had intent to manipulate or stabilize stock prices, whether a series of transactions could constitute illegal market manipulation even without artificial price-setting, and whether the defendants’ trading behavior objectively qualifies as manipulation.

The court said it plans to conclude pretrial proceedings on May 8, followed by four formal hearings.

 

 

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