Lee Soo Man's legal representative Hwawoo released a statement on the matter, stating SM and Kakao engaged in illegal practices in order for Kakao to become the second largest shareholder in SM Entertainment.

In summary, after Lee Soo Man's production contract with SM Entertainment came to an end, the co-CEOs of the company - Lee Sung Soo and Tak Young Joon - are said to have cut ties with the producer and released the plans for SM 3.0 without notifying Lee Soo Man. Then SM Entertainment announced they were issuing new shares in the company.

Lee Soo Man's legal representative confirmed, "SM Entertainment's board of directors unilaterally distributed new shares and convertible bonds to the third party Kakao in order to expand their reach and make things more favorable to them as they tried to secure a competitive edge in the direction of the company."

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