Prosecutors again sought a 15-year prison term for Kim Bum-soo (김범수), head of Kakao's Future Initiative Center, who was indicted on charges of manipulating prices during the acquisition of SM Entertainment and was acquitted at first instance. Prosecutors argued the trial court failed to properly assess evidence consistent with the alleged crimes and said the acquittal should be overturned.

At a sentencing hearing in the appeal trial on charges of violating the Capital Markets Act, heard by the Seoul High Court's Criminal Division 4-1 on Sept. 23, prosecutors asked the court to sentence Kim to 15 years in prison and a 510 million won fine.

For Bae Jae-hyun (배재현), former head of Kakao's investment division who was also indicted, prosecutors sought 12 years in prison and a 510 million won fine. They also requested fines of 500 million won each for Kakao and Kakao Entertainment as corporate entities. All requested sentences were the same as in the first trial.

Prosecutors said the trial court "did not make a judgment despite multiple clear pieces of evidence consistent with the criminal facts" and added that "the trial judgment contains errors of fact-finding and misinterpretation of legal principles, so the not-guilty verdict for the defendants must be overturned."

Kim and others were sent to trial on allegations that in February 2023, as Kakao competed with HYBE for control of SM Entertainment, they sought to keep SM's share price above the tender offer price of 120,000 won per share to obstruct HYBE's tender offer.

Prosecutors believe Kakao and One Asia Partners invested about 240 billion won on Feb. 16 to 17 and Feb. 27 to 28, buying SM shares intensively in 553 instances to push the price above 120,000 won and maintain that price range.

Prosecutors have argued that, based on messages and call records among Kakao officials and on the funding and order processes, Kakao sought to block HYBE's tender offer by keeping SM's share price above a certain level, and that the defendants conspired in advance in the process.

Kim's side, however, has countered that the purchases of SM shares were a normal investment to acquire a stake needed to secure management control and that there was no intention to artificially manipulate the share price.

The trial court accepted Kim's argument and acquitted him on the price-manipulation charge. It ruled that Kakao's large-scale on-exchange purchases alone, even if they affected SM's share price, could not be seen as market manipulation.

The court said that when looking at the time intervals and the forms of Kakao's buy orders, there were differences from manipulative orders. It also ruled that the existence of a management objective to block HYBE's tender offer alone does not mean manipulative intent is 인정ed under the Capital Markets Act.

Prosecutors appealed. In the appeal trial, they continued to argue that the first trial did not sufficiently reflect evidence such as messages among Kakao officials and recordings of phone calls.

In the appeal trial, the key issues included whether Kakao had the purpose of fixing or stabilising SM's share price above a certain level and whether the actual order patterns amounted to market manipulation under the Capital Markets Act.

The appeal court will determine whether Kakao had manipulative intent to keep SM's share price above a certain level and whether the actual trading methods constitute market manipulation under the Capital Markets Act.