Seoul court clears Kim Beom-su of wrongdoing, paving way for Kakao to move past legal uncertainty and refocus on growth
On Tuesday, the Seoul Southern District Court cleared Kakao founder Kim Beom-su of allegations that he manipulated stock prices during the company’s 2023 takeover of K-pop agency SM Entertainment. The court also found former Chief Investment Officer Bae Jae-hyun, Kakao Corp., and Kakao Entertainment not guilty of breaching the Capital Markets Act.
The decision ends a two-year investigation that had cast a legal and reputational shadow over Kakao and its leadership. Following the ruling, Kakao’s shares and those of its subsidiaries climbed sharply, signaling investor relief and renewed confidence in the group’s stability.
Allegations Stemmed from SM Entertainment Takeover Battle
Prosecutors had demanded a 15-year prison sentence and a fine of 500 million won (around 350,000 US dollars) for Kim, accusing him of ordering Kakao executives to artificially inflate SM Entertainment’s share price during a bidding war with Hybe — the parent company of BTS’s label Big Hit Music.
The prosecution claimed Kim instructed trades worth 240 billion won in SM shares above Hybe’s public tender offer to prevent the rival agency from securing control. Kim was arrested in July 2024 and released on bail that October as the investigation continued.
Court Finds No Evidence of Collusion or Market Rigging
In its verdict, the court rejected the prosecution’s arguments, citing insufficient evidence to prove any intent or collusion to manipulate stock prices. “Based on the evidence presented, it is difficult to conclude that there were discussions or plans to collude in market manipulation,” the court stated.
Judges noted that Kakao’s trading activities “differed significantly from typical manipulation practices” in timing and method, suggesting that the transactions were consistent with standard acquisition procedures. The ruling concluded that the purchases reflected a legitimate corporate strategy rather than deliberate interference with market pricing.
The court also dismissed accusations of violating shareholding disclosure rules, adding that no conspiracy among the defendants had been proven. Alongside Kim, Kakao executives Bae Jae-hyun and other affiliates were acquitted. However, Ji Chang-bae, CEO of private equity fund One Asia Partners, was convicted on separate embezzlement and breach of trust charges and received a three-year prison term with a four-year probation.
Founder Responds, Company Seeks to Rebuild Trust
Following the verdict, Kim Beom-su expressed appreciation for what he called a thorough review of the evidence. “I sincerely thank the court for carefully examining this case and reaching this conclusion,” he told reporters. “I hope this decision allows Kakao to move beyond the shadow of allegations that have burdened the company.”
Kakao, in its official statement, acknowledged the prolonged uncertainty the investigation had caused. “The Kakao Group faced many difficulties during two years and eight months of investigation and trial,” the company said. “It was particularly challenging to respond swiftly to market changes during this time. We will now work to rebuild trust and fulfill our social responsibilities.”
Legal Clarity Secures Kakao’s Financial Holdings
The acquittal removes a major concern regarding Kakao’s eligibility as a major shareholder in Kakao Bank. Under South Korean financial regulations, entities or individuals convicted of financial crimes within the past five years are barred from owning more than 10 percent of a bank’s shares. A conviction could have forced Kakao — which holds a 27.16 percent stake in Kakao Bank — to sell down its holdings, risking the loss of control over one of its most valuable assets.
By clearing Kim and Kakao of wrongdoing, the ruling allows the conglomerate to maintain its ownership structure and continue expanding its presence in fintech and digital banking without regulatory obstacles.
Markets React Positively to Verdict
Investor sentiment turned immediately after the verdict. Kakao’s stock rose 5.95 percent on Tuesday to close at 62,300 won, while Kakao Bank and Kakao Games shares gained 2.84 percent and 3.34 percent, respectively. KakaoPay also climbed nearly 4 percent on the Korea Composite Stock Price Index.
Analysts said the verdict eased lingering market uncertainty surrounding the group. “This ruling removes a significant overhang on Kakao’s valuation,” one Seoul-based analyst noted, adding that it could stabilize investor confidence in the company’s restructuring and AI-driven business initiatives.
Outlook: Legal Clarity but Lingering Scrutiny
Although the verdict clears Kim in the first trial, the prosecution has said it will review the decision before deciding whether to appeal. Industry watchers suggest that while the ruling reduces Kakao’s immediate legal exposure, the company still faces the challenge of repairing its public image after a string of controversies, including criticism of its app redesign and governance practices.
Kim, who stepped back from active management earlier this year for health reasons, continues to oversee Kakao’s Future Initiative Center, focusing on long-term technology strategy and innovation. For now, the court’s decision provides a reprieve — giving both Kim and Kakao an opportunity to regain stability, reassure regulators, and rebuild credibility after a turbulent two years.
