South Korean prosecutors said on Wednesday that they have filed an arrest warrant for Brian Kim, the founder of Korean internet giant Kakao, as part of an investigation into alleged stock market manipulation related to a high-profile bidding war for SM Entertainment, one of the country’s biggest music labels, in 2023.

The warrant comes a week after Seoul-based prosecutors launched a probe into Kim’s involvement in the alleged manipulation of SM Entertainment’s share price.

Kakao did not respond to a request for comment ahead of publication.

In March 2023, Kakao and Kakao’s subsidiary, Kakao Entertainment, became the controlling shareholder in SM Entertainment after winning a bidding war for a 39.9% stake in the K-pop label. Kakao was competing with Hybe, the owner of South Korean music agency BigHit, known for signing the popular K-pop boy band, BTS. Kakao had launched a tender offer to buy SM Entertainment’s shares at 150,000 KRW ($115) each, eclipsing an earlier tender offer by Hybe priced at 120,000 KRW (~$87) per share.

A tender offer is when a company goes directly to a target company’s shareholders to buy their shares within a set period. The objective of a tender offer is usually to take control of the target company, and the success of such an offer often depends on the buyer obtaining a certain percentage stake.

Korean prosecutors suspect that the price of SM Entertainment’s shares was manipulated right before the deal was closed. Kakao is reportedly accused of purchasing KRW 240 billion (approximately $174 million) of SM Entertainment’s shares over 553 trades in February 2023. That allegedly drove the company’s share price above Hybe’s tender offer price of 120,000 KRW per share, which caused Hybe to withdraw its offer.

Kakao is also accused of not reporting the large stock purchases to financial authorities.

Kakao’s chief investment officer, Jae-Hyun Bae, was arrested last October following allegations of stock price manipulation after the takeover. He is currently on trial.

Following Kakao’s acquisition of SM Entertainment last March, Hybe sold off a portion of its stake in the agency to Kakao, reducing its ownership to 8.8% from 15.8%.

Founded in 2006, Kakao is one of South Korea’s biggest internet firms. It operates popular messaging service Kakao Talk, on-demand taxi service Kakao Mobility, online banking platform Kakao Bank, music streaming service Melon, and comics hosting platform Kakao Webtoon.

If Kakao’s chief information officer and other executives at Kakao Entertainment are found to be in violation of South Korea’s Capital Markets Act and incur bigger penalties than a fine, the country’s financial regulator could compel Kakao to divest at least 10% of its ownership in its online banking subsidiary, Kakao Bank.

According to South Korea’s online banking regulations, in order to have more than 10% of the voting rights in mobile-only banks, non-financial companies must not have breached financial laws, such as the Capital Markets Act, or fair trade laws in the last five years.