Watchdog raids Kakao founder's office on suspicion of stock manipulation

By Lee Min-hyung

Kakao founder Kim Beom-su / Yonhap

The Financial Supervisory Service (FSS) raided the office of Kakao founder Kim Beom-su, Thursday, for his alleged involvement in stock manipulation.

Kim and some other members of Kakao's top management are suspected of having manipulated the price of SM Entertainment shares early this year. Back then, the mobile platform operator was involved in a dispute with HYBE to secure management rights to SM Entertainment.

The FSS is looking into whether Kakao violated a local capital market act while trading SM Entertainment stocks.

“We are conducting an investigation into the incident by analyzing diverse data,” FSS Governor Lee Bok-hyun said last month. “We are confident about revealing the truth, so the authority will be able to share details soon.”

In February, SM Entertainment's stock price started soaring for no apparent reason. HYBE submitted a petition to the watchdog, arguing that some traders were possibly engaged in unfair stock transactions for a certain purpose.

HYBE bought a stake in SM Entertainment from its founder Lee Soo-man, but gave up a takeover bid following an agreement with Kakao, which became the largest shareholder of the K-pop management company by securing a 40 percent stake.

The FSS has since launched an investigation into Kakao and SM. The authority is known to have secured Kim's smartphone and some pieces of evidence at his office in Seongnam, Gyeonggi Province.

Kakao did not issue any statement over the ongoing investigation.