Kakao office raided amid stock manipulation allegations

Prosecutors raided Kakao's office building under charges of stock manipulation during the takeover of SM Entertainment.

Kakao's office building in Pangyo, Gyeonggi [YONHAP]

Prosecutors raided Kakao's office building in Pangyo, Gyeonggi under charges of stock manipulation during the takeover of K-pop agency SM Entertainment.

The Seoul Southern District Prosecutors' Office said it executed a search and seizure warrant for some of the offices in Kakao’s building in Pangyo. However, Kakao founder Kim Beom-su’s personal office in Pangyo and his residence in Seongnam, Gyeonggi, were not included on the list.

On Nov. 15, the financial regulator referred Kim and five other Kakao executives and the company’s attorney to the prosecution for violating the Capital Markets Act. On Nov. 13, Kakao and the company’s Chief Investment Officer Bae Jae-hyun were indicted under the same allegation of inflating SM Entertainment shares by injecting some 240 billion won ($184.5 million), above the open market purchase price suggested by HYBE.

Prosecutors reported that Bae and two other executives manipulated the stock price 409 times on Feb. 16, 17, 27 and 28. They also alleged that Kakao did not report the stock purchases to the Financial Supervisory Service.

The Capital Markets Act states that when a person acquires more than 5 percent of the total number of listed stocks, they need to report the purchase to the financial regulator within five working days.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]