The headquarters of K-pop powerhouse SM Entertainment was raided by South Korea’s financial regulators on Tuesday.

This came amid speculation that the country’s Internet giant Kakao had manipulated stock prices in the process of acquiring more shares of SM Entertainment, reported Yonhap on Tuesday, citing sources.

As part of the probe, the Financial Supervisory Service (FSS) also raided the offices of Kakao and its entertainment unit, Kakao Entertainment, earlier this month.

The FSS has been investigating the allegations after SM Entertainment’s rival Hybe, the management agency behind K-pop supergroup BTS, filed a petition for a probe with the authority in February.

Hybe alleged that Kakao manipulated SM Entertainment’s stock prices through another company to hinder Hybe from making a tender offer to secure a larger stake in SM Entertainment, said Yonhap.

SM Entertainment is the entertainment agency behind K-pop groups including Super Junior, Girls’ Generation and Red Velvet.

Last month, Hybe withdrew its plan to take control of SM Entertainment and allowed Kakao to expand its entertainment business further.

Hybe said its decision to halt the takeover bid came after the price to acquire SM Entertainment exceeded a fair range as the competition intensified.

According to Kakao’s regulatory filing in March, the company and its entertainment unit have upped their stake in SM Entertainment to 39.9 per cent. It previously had a stake of less than 5 per cent in SM Entertainment.