MANILA, Philippines – SM Entertainment’s headquarters in Seongsu District, eastern Seoul was raided by financial regulators on Tuesday, April 18 over stock market manipulation allegations.

Prosecutors from the Financial Supervisory Service (FSS) raided the main office after sources said that Kakao Corp. allegedly manipulated the stock prices while acquiring shares of the K-pop pioneer powerhouse. During the raid, FSS also confiscated data on February’s stock trading for further investigation.

The raid ensued after rival agency HYBE, the agency of top-selling Korean boy band BTS, filed a petition to investigate the case in February. Kakao’s offices had also been raided as part of the investigation in early April.

On March 12, HYBE withdrew its plan to take control of SM Entertainment Co Ltd, ending a weeks-long takeover battle between HYBE and social media giant Kakao Corp. HYBE said its decision to halt the takeover bid came after the stock market had been showing “signs of overheating due to competition.”

A week prior, tech giant Kakao launched a 1.25-trillion won ($946.80 million) tender bid for up to 35% of SM Entertainment at 150,000 won per share, well above the 120,000 won per share offer from HYBE for a 25% stake that gained little traction with shareholders. HYBE accused Kakao of “artificially boosting the stock prices of SM,” by purposely “buying a chunk of SM shares.”

Kakao is currently the largest shareholder of SM Entertainment, with a 40% stake.

SM’s management became estranged from its founder Lee Soo-man in February over governance issues.

SM is home to popular K-pop groups such as Girls’ Generation, H.O.T., EXO, Red Velvet, Super Junior, SHINee, NCT Dream, and Aespa. – Rappler.com