South Korean prosecutors are asking an appeals court to overturn Kakao founder Kim Beom-su’s acquittal and sentence him to 15 years in prison over alleged stock manipulation during the 2023 battle for control of SM Entertainment.
The request came September 23rd at the final hearing before the Seoul High Court. Prosecutors also sought a fine of approximately KRW 500 million for Kim. The court is scheduled to deliver its decision November 20th, Yonhap reports.
Kim and the other defendants were acquitted at trial in October 2025. Prosecutors now argue that the lower court misread both the evidence and the law when it rejected their case that Kakao deliberately pushed SM Entertainment’s share price above the level of HYBE’s tender offer.
The charges grew out of the 2023 fight between Kakao and HYBE for influence over SM Entertainment. HYBE eventually withdrew from its takeover attempt, while Kakao and Kakao Entertainment emerged with a combined 39.9% stake in the K-pop company.
More than three years later, prosecutors are still trying to prove that the way Kakao pursued that outcome crossed the line from aggressive dealmaking into illegal market manipulation.
Prosecutors Want the Acquittals Overturned
The 15-year request is not a new punishment prosecutors introduced for the appeal. It matches the prison term they sought during Kim’s first trial.
Former Kakao Chief Investment Officer Bae Jae-hyun faces a requested 12-year sentence, while prosecutors are seeking nine years for former Kakao Entertainment CEO Kim Sung-soo. Other former executives face additional requested prison terms, while Kakao Corp. and Kakao Entertainment could face financial penalties if their acquittals are overturned.
At the September 23rd hearing, prosecutors argued that the trial court failed to properly evaluate evidence they say demonstrates a plan to interfere with HYBE’s tender offer. Their position is that Kakao had already decided to pursue SM and needed HYBE’s offer to fail for that strategy to succeed.
Kim continues to deny wrongdoing.
In his closing statement, he said he had never instructed anyone to use illegal or improper methods and challenged prosecutors to establish when, where and to whom he supposedly gave an order to manipulate SM’s stock, The Korea Times notes.
The Seoul High Court is therefore reconsidering a case in which the first judges did considerably more than find a technical flaw in the prosecution. They rejected central parts of its theory of what happened during the SM takeover battle.
HYBE’s Tender Offer Started the Fight
The criminal case traces back to February 2023, when HYBE was trying to secure control of SM Entertainment.
After acquiring a stake from SM founder Lee Soo-man, HYBE launched a tender offer at KRW 120,000 per share. The move put the company behind BTS in position to potentially become the dominant shareholder in another of South Korea’s foundational K-pop agencies.
SM was hardly a routine acquisition target. Its history stretches across generations of Korean pop, while its roster includes acts such as aespa, NCT, EXO and Red Velvet. Bringing SM under HYBE’s control would have combined two enormously influential collections of artists and music intellectual property.
Kakao had its own interest in the company.
Prosecutors allege Kakao and associated parties spent approximately KRW 240 billion, or roughly $177 million, buying SM shares across 553 transactions during the tender-offer period. The prosecution’s theory is that those purchases helped keep SM’s market price above HYBE’s KRW 120,000 offer and discouraged shareholders from tendering their stock, MBW details.
Kim and the other defendants dispute that characterization. They have maintained that the purchases were legitimate efforts to acquire shares rather than trades intended to artificially fix SM’s market price.
That distinction sits at the center of the criminal case. Buying enough stock to affect a market price is not by itself the same thing as illegally manipulating that price.
The First Court Rejected the Manipulation Theory
On October 21st, 2025, the Seoul Southern District Court acquitted Kim, Bae, Kakao and Kakao Entertainment of the stock-manipulation charges.
The reasoning was significant.
The trial court found that Kakao’s large open-market purchases could not be treated as manipulation merely because they affected SM’s share price. Judges also identified meaningful differences between Kakao’s trading pattern and the kinds of orders associated with attempts to artificially control a stock price.
They were not persuaded that Kakao had to acquire SM at all costs or that the evidence established an illegal agreement to stop HYBE’s tender offer. Yonhap’s account of the verdict says the court accepted the possibility that Kakao was acquiring shares because it expected SM’s price could continue rising even if HYBE’s offer failed.
The judges also questioned evidence involving a former Kakao Entertainment investment executive whose statements prosecutors had used to support the alleged conspiracy.
Taken together, those findings made the October verdict a substantial rejection of the prosecution’s interpretation of the trading rather than a narrow acquittal based on one missing piece of evidence.
Prosecutors appealed a week later, arguing that the lower court had misunderstood both the facts and the applicable law.
Kakao Emerged With 39.9% of SM
The corporate battle did not wait for the criminal case to play out.
HYBE abandoned its attempt to take control of SM in March 2023 as competition for the company intensified. Kakao and Kakao Entertainment subsequently secured a combined 39.9% stake, giving the group the large strategic position in SM that HYBE had been pursuing through its own tender offer.
That outcome is why the alleged stock manipulation matters so much to the music side of the case.
The contested transactions occurred during a battle over who would wield influence at a company responsible for major recording artists, touring operations, music rights and decades of K-pop intellectual property.
HYBE’s withdrawal prevented the combination of its rapidly expanding label network with SM’s artist roster. Kakao instead added SM to a broader entertainment business already spanning music distribution, artist management, digital platforms and other content operations.
The ownership result has remained in place while the criminal case moved from investigation to trial, acquittal and now appeal.
A 15-Year Request Is Not a Sentence
The size of the prosecution request makes for an extraordinary development, but its procedural meaning is important.
Kim has not been sentenced to 15 years. He remains acquitted unless the Seoul High Court overturns the lower court’s decision.
Prosecutors are asking the appellate judges to reverse that outcome and impose the punishment they believe the evidence warrants. The court is not required to accept either the requested prison term or the prosecution’s interpretation of the case.
That distinction carries additional weight after the first trial. Kim’s October acquittal followed a proceeding in which judges concluded the evidence did not establish the alleged stock-manipulation scheme.
The prosecution’s appeal says those conclusions were wrong. Kim and the other defendants are asking the Seoul High Court to leave the acquittals intact.
The companies themselves remain part of the appeal as well. Kakao and Kakao Entertainment were acquitted alongside the individual defendants, and prosecutors are seeking to reverse those corporate verdicts.
Until the appellate judgment is delivered, the requested sentences remain precisely that: requests from prosecutors rather than punishments imposed by the court.
The Case Reaches Beyond the Music Business
SM Entertainment explains why the case matters to K-pop. Kakao’s wider corporate structure gives the outcome potential consequences elsewhere.
Kakao operates businesses spanning messaging, internet services, entertainment, payments and banking, and Kim remains one of the central figures associated with the group.
The company also owns roughly 27% of KakaoBank. South Korean financial rules can restrict the amount of a bank that a shareholder may own following certain financial-crime convictions, which has made the SM case relevant to Kakao’s banking interests as well as its entertainment holdings.
When Kim was arrested during the investigation in 2024, Reuters highlighted the potential KakaoBank implications of a conviction.
No such consequence follows from a sentencing request alone. Kim was acquitted at trial, and the appellate judges have yet to decide whether that verdict should stand.
The potential spillover nevertheless shows how far the case has traveled from the original contest over SM shares.
The Appeal Will Be Decided November 20th
The Seoul High Court is scheduled to deliver its appellate decision on November 20th.
Until then, two sharply different versions of the 2023 takeover battle remain before the judges.
Prosecutors say Kakao wanted SM, needed HYBE’s tender offer to fail and used roughly KRW 240 billion in share purchases to push the market toward that outcome. They argue that the trial court overlooked evidence supporting that theory and misapplied the law when it acquitted the defendants.
Kim and his co-defendants maintain that the purchases were legitimate, that there was no illegal agreement to defeat HYBE and that prosecutors have failed to prove Kim directed a stock-manipulation scheme.
The first court sided with the defendants.
The appeal now asks a second court to revisit the same fight, with consequences extending from Kim personally to Kakao, Kakao Entertainment and the corporate history of SM Entertainment.
What began as a contest over who would control one of K-pop’s most important companies has become a criminal appeal carrying a requested 15-year prison term.
November 20th will determine whether the acquittals survive.