FSS raids Kakao founder's office over alleged stock manipulation

Finance

Published: 10 Aug. 2023, 17:25 Updated: 10 Aug. 2023, 17:41

FSS raids Kakao founder's office over alleged stock manipulation

Kakao founder Kim Beom-su [KAKAO]

The financial authorities on Thursday raided the office of Kakao founder Kim Beom-su, also known as Brian Kim, on allegations of manipulating the stock price of SM Entertainment.

Financial Supervisory Service (FSS) officials raided Kim’s office at Kakao headquarters in Pangyo, Gyeonggi, and confiscated materials related to the alleged market manipulation.

The market watchdog suspects Kim and other senior executives of Kakao took part in swinging SM Entertainment’s stock price.

“Today’s raid is part of our ongoing investigation [over the alleged stock manipulation],” said an official in the FSS’s special judicial squad in charge of the case.

FSS Gov. Lee Bok-hyun told reporters during a financial event last month that the watchdog is confident it can establish the facts of the case.

Prosecutors and FSS investigators have been probing into Kakao’s stock manipulation allegations since April. They raided Kakao headquarters that month to secure stock trading data after HYBE accused Kakao of scooping up a 2.9 percent stake of SM shares on February 16 to pump up its stock price.

SM Entertainment rose 7.59 percent to close at 131,900 won ($100.3) that day.

Kakao and HYBE were then in a fierce battle to acquire bigger slices of SM Entertainment.

HYBE had opened a tender offer to buy SM Entertainment shares at 120,000 won per share but failed to attract investors since SM's share price hovered above the offered price.

HYBE pulled out from the battle shortly after and Kakao became the largest shareholder of SM Entertainment with a combined holding of 39.9 percent.

BY SOHN DONG-JOO [sohn.dongjoo@joongang.co.kr]