The Securities Deliberation Committee Defers Decision on Kakao Mobility... To Be Reconsidered Later

Temporary Securities and Futures Commission Meeting to Be Held Soon

The decision on sanctions against Kakao Mobility, which is suspected of 'window dressing' accounting, has been postponed.

According to the Financial Services Commission on the 5th, the Securities and Futures Commission (SFC) held its 11th deliberation on the same day and decided to 'defer' the agenda regarding Kakao Mobility's accounting violations. They plan to hold a temporary SFC meeting again for reconsideration.

The agenda on Kakao Mobility's accounting sanctions was first submitted to the Audit Committee under the Financial Services Commission in April, and after two meetings, it was brought before the SFC this time.

The main issue at the SFC was whether there was 'intentionality' in Kakao Mobility's revenue recognition method. During the Audit Committee meetings, the members generally agreed on the accounting violations. However, opinions differed on the judgment of 'intentionality.'

The Financial Supervisory Service (FSS) judged that Kakao Mobility inflated its franchise taxi business revenue through window dressing accounting since 2020. They argued that the net method, which counts only 4%?the franchise fee minus the partnership fee?as revenue, should be applied. On the other hand, Kakao Mobility claimed that the gross method should be applied, recognizing 20% of the fare commission as revenue.

In February, the FSS sent Kakao Mobility a preliminary notice of measures including the highest penalty level, 'Intentional Level 1.' The penalty levels are divided into intentional, gross negligence, and negligence according to the motive of the violation, and into levels 1 to 5 according to the severity. The FSS judged both the motive and severity at the highest level.