Bloomberg News

South Korea Police Arrests 6 Over Spreading N. Korea Rumors

February 22, 2012

(Updates with won, Kospi performance in third paragraph, police comment in fourth.)

Feb. 21 (Bloomberg) -- South Korean police arrested six people for spreading false rumors about a North Korean nuclear reactor explosion on Jan. 6 to manipulate the stock market.

The six, including two office workers and a university student, conspired to circulate rumors through instant-messaging that a light-water reactor exploded in North Korea and radiation had leaked, the National Police Agency said in a statement posted on its website today. They made 61 million won ($54,314) in profits from spreading rumors to move financial markets, according to the police.

The South Korean won declined as much as 0.9 percent on Jan. 6 to 1163.15 per dollar, its weakest level since Dec. 20, while the benchmark Kospi index dropped as much as 2.1 percent. The decline prompted the nation’s financial regulator to investigate the spreading of rumors, and the stock exchange to probe whether there were any “unusual” trades.

“We will continue to strictly probe stock price manipulation crimes aimed at disrupting equity-market order and doing harm to investors,” the police said in the statement. “The police and the Financial Supervisory Service will keep expanding the investigation.”

The South Korean financial regulator said on Dec. 28 it would boost monitoring of market speculation related to North Korea after the Kospi index tumbled a day earlier. The gauge sank as much as 2.3 percent on Dec. 27 on what exchange officials attributed in part to unconfirmed rumors about the health of North Korea’s new leader and plans by China to send troops to the communist nation.

--Editors: Darren Boey, Matthew Oakley

To contact the reporters on this story: Sangwon Yoon in Seoul at syoon32@bloomberg.net Saeromi Shin in Seoul at sshin15@bloomberg.net;

To contact the editors responsible for this story: Darren Boey at dboey@bloomberg.net Peter Hirschberg at phirschberg@bloomberg.net


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