Group rigs stocks with nuke rumor

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Group rigs stocks with nuke rumor

Police yesterday charged six people who manipulated stock prices by spreading false rumors of an explosion at a nuclear facility in Yongbyon, North Korea.

According to the Korean National Police Agency, the six culprits - consisting of a university student, a high-ranking official working at a domestic conglomerate and four others without jobs - met in an Internet cafe in Busan on Jan. 6 to formulate the scam.

“There, they used one desktop computer to log-on to so-called ‘Miss Lee,’ a popular online messenger among many stock trading managers,” Jeong Seok-hwa, an official at the KNPA told the Korea JoongAng Daily in a telephone interview yesterday.

“They spread false rumors about North Korea to 203 trading managers and financial analysts, saying the light water reactor in Yongbyon had exploded and extremely high radiation was leaking from the nuclear facility due to the northwest wind.

After the rumor, several stock markets such as the Kosdaq and Kospi rapidly fell, but rose again after the rumor was found to be false.

“Right before they committed the crime, they deliberately bought financial derivatives called equity putable warrants and earned profits from falling stock prices,” Jeong said.

“And then, predicting that the prices would rebound soon, they bought another set of derivatives called equity call warrants, through which they benefitted by the prices going back up.”

The six culprits earned a total of 29 million won ($25,814) through the scam. After the rumor spread between 1:56 p.m. and 2:05 p.m., the Kospi dropped to a low of 1,824.29 won, police said.

Police also said yesterday that among the six people, there was an official working at Samsung SDS as a financial manager who embezzled 2 billion won from the group and spent 130 million won to help fund the stock manipulation scam.

Police said that the six people also committed another stock manipulation in early February, with a similar trick. They disguised themselves as officials working at a local pharmaceutical company and spread a false statement to public relations agencies that they had invented a special vaccine.

The agencies didn’t know they were fake officials and delivered the statement to local reporters, who wrote articles about it later.

The articles caused the stock price of the pharmaceutical company to surge, and they earned a total of 32 million won in profits by the risen price.

By Kim Hee-jin []
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