Asia Tech Wire (July 23) -- Kim Beom-soo, founder of South Korean IT giant Kakao, was arrested by South Korean prosecutors on Tuesday on suspicion of maliciously manipulating stock prices during the acquisition of SM Entertainment.

The prosecutors will investigate him and hand him over to the court within a maximum of 20 days of arrest.

South Korean prosecutors believe that Kim allegedly invested about 240 billion won in SM shares over four days during Kakao's acquisition of SM Entertainment in February last year, in order to inflate the stock price and hinder the public takeover by rival Hybe, the owner of boy band BTS.

Last Wednesday the South Korean prosecutors said they had applied for Kim's arrest.

On Monday, Kim attended a pre-trial detention hearing at the Seoul Southern District Court. The court issued an arrest warrant early Tuesday morning, according to South Korean media reports.

Shares of KakaoBank, an Internet bank owned by Kakao, had jumped 11% in Seoul on Tuesday morning.