Prosecutors raided the office of Kakao Corporation founder Kim Beom-su over alleged stock manipulation in the company's acquisition of SM Entertainment.

The Seoul Southern District Prosecutors' Office sent prosecutors and investigators to the office on Wednesday to seize related evidence.

Earlier, the Financial Supervisory Service(FSS) referred Kim, Kakao CEO Hong Eun-taek, Kakao Entertainment co-CEOs Lee Jin-soo and Kim Sung-soo, and lawyers who provided legal counseling to the prosecution with a recommendation to indict.

The company's management is suspected of inflating the share prices of SM, one of the country's major K-pop management firms, in a bid to obstruct a takeover earlier this year by Hybe, the parent company for BTS' management agency BigHit.

Kakao is suspected of scheming with a private equity fund operator to inject around 240 billion won, or some 185 million U.S. dollars, into the market, thereby surpassing 120-thousand won per share Hybe was offering small shareholders.

Hybe eventually suspended the bid, allowing Kakao and its subsidiary to jointly secure a nearly 40-percent stake in SM to gain management control. Kakao is also accused of failing to fulfill the compulsory declaration on their stock acquisition.

Prosecutors had earlier indicted Kakao chief investment officer Bae Jae-hyun for his alleged role in the case.