Kim Beom-su's Nov. 20 appeal ruling hinges on intent behind Kakao's 110 billion won of SM buying

Divided across the three days, the buying comes to about 36.7 billion won a day ^[1]. Prosecutors count more than 300 instances of manipulation in it, carried out through high-priced purchases and by absorbing available supply ^[3]. That puts the average alleged instance at less than about 367 million won ^[2]. Kim's side calls the same trades on-market buying to build a stake in SM Entertainment, and says Kim voiced opposition during the acquisition ^[12].

The trial court's legal holding was narrow. Large on-market purchases could not be treated as price manipulation merely because they affected the share price ^[5]. Much of the acquittal rested on facts. The judges found it difficult to conclude that Kakao had to take management control of SM Entertainment at the time, that a covert takeover was decided at Kakao's investment table, or that anyone discussed blocking the tender offer or conspired on price ^[6]. They found that Lee Jun-ho, a former Kakao Entertainment investment strategy head and the prosecution's key witness, gave false statements under the pressure of repeated arrest warrant requests ^[10]. "This kind of investigative method can distort the truth. Whoever the actor may be, it should now be avoided," the court said ^[11].

An affirmance on the facts would leave the trial court's line on market buying where it is. A reversal on intent would accept that the buying was aimed at keeping the price above the tender price to obstruct HYBE ^[4], while the principle that price impact alone is not a crime survives. Rejecting that principle outright is part of what prosecutors want when they say "the lower court's judgment contains errors of fact and law, and the acquittals of the defendants must be reversed" ^[9]. Only that third outcome would change what an acquirer may do on the exchange during a contested tender.

In my view the case turns on intent. The prosecution's appellate case is about purpose: a recording played in June in which Kim is heard saying "Bring it over peacefully" ^[13], and the claim that "On the founder's instructions, the defendants moved to block the tender offer and complete the acquisition while avoiding an outward fight with HYBE" ^[14]. The counter-case is that even a reversal on intent has to say which of the 300-plus instances crossed the line. That answer would guide the next contested tender whatever the judges call it.

The prosecution's attempts to add witnesses failed. Lee was accepted as a witness on appeal but did not appear, and the court refused a request to call HYBE Chairman Bang Si-hyuk ^[15]. A reversal would overturn a credibility finding about a witness the appellate judges never heard in person.

One participant was convicted at the first trial. Jee Chang-bae, head of One Asia Partners, which prosecutors place among the buyers ^[3], was found guilty under the Act on Aggravated Punishment of Specific Economic Crimes and given three years, suspended for four ^[7]. The report does not specify which conduct that conviction covered.

Prosecutors again asked for 15 years and a 500 million won fine, the sentence they sought at trial ^[8]. The fine is about 0.45% of the purchase total ^[3], so what Kim risks is the prison term. His final statement argued on the ground the trial court chose. "Even after the indictment, no specific evidence of conspiracy has been presented showing when, where or to whom I ordered price manipulation," Kim said ^[16].