Investigation by Financial Supervisory Service into Suspected Stock Manipulation of SM Entertainment by Kakao Executives


SEOUL, Aug. 10 (Yonhap) — On Thursday, the office of tech giant Kakao Corp.’s founder was searched by a special investigation unit of the Financial Supervisory Service (FSS) in response to allegations that Kakao’s executives were involved in influencing the stock prices of SM Entertainment Co., according to sources. The inspection occurred at the Kakao headquarters in Pangyo, just south of Seoul. It is believed that Kakao has been manipulating the stock of SM Entertainment since early this year when the company was attempting to acquire shares of the K-pop powerhouse. The FSS started investigating the claims after Hybe, SM’s rival agency and the company behind global superstar BTS, filed a petition for a probe with the agency in February. Hybe and Kakao were both trying to gain control of SM, the entertainment agency behind EXO, Aespa, and NCT. In the end, Kakao was successful in securing a 40 percent stake in SM, making it the largest shareholder of the agency. Hybe had initially acquired a 14.8 percent stake in SM Entertainment from SM founder Lee Soo-man, but then put a stop to their takeover bid following an agreement with Kakao a few days after Kakao’s tender offer began on March 7. Hybe has accused Kakao of manipulating SM’s stock prices through another company in order to prevent Hybe from making a tender offer to acquire a larger stake in SM.

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