Financial Services Commission Imposes 3.5 Billion KRW Fine on Kakao Mobility

On the 27th, the Financial Services Commission announced at its 20th meeting that it had decided to impose a fine of 3.4626 billion KRW on Kakao Mobility for violating accounting standards. A fine of 692.4 million KRW was also imposed on CEO Ryu Geung-seon and the former Chief Financial Officer (CFO).

According to the financial authorities, Kakao Mobility applied the so-called 'gross method' in its financial statements from 2020 to 2022, recognizing the entire franchise fee received from taxis (about 20%) and the business partnership fee paid to taxis (about 17%) as operating revenue and operating expenses, respectively. The financial authorities judged that recognizing the entire franchise fee as operating revenue based on the apparent contract structure constituted a serious violation of accounting standards.

Earlier, the Securities and Futures Commission under the Financial Services Commission determined that Kakao Mobility had grossly overstated operating revenue and operating expenses and found significant negligence, deciding to impose such fines and refer the case to the prosecution.

In addition, the Financial Services Commission decided to impose a fine of 1.0113 billion KRW on TYM for violating accounting standards, and a fine of 1.0138 billion KRW on two individuals including the CEO. Three former executives of Luxel were fined 600 million KRW, and Induk Accounting Corporation, which violated audit standards while performing audit duties, was fined 160 million KRW.