'Treasure ship' stock bubble draws South Korea warning

Shinil Group said it had found an imperial Russian vessel off Ulleung Island which was believed to contain gold bullion and coins worth 150 trillion won ($130 billion)

Rumours of a treasure trove on a Russian ship that sank off South Korea a century ago have sent a company's shares on a rollercoaster ride, triggering a warning Friday from financial regulators.

Start-up business Shinil Group announced earlier this week that it had found an imperial Russian navy vessel off Ulleung island in the Sea of Japan, saying it was believed to contain gold bullion and coins worth 150 trillion won ($130 billion).

But critics noted that in 2003 another firm had already sparked an investor bubble by announcing the discovery of the Russian Imperial Navy cruiser Dmitrii Donskoi, which was scuttled by her crew in a 1905 naval battle against Japan.

Others pointed out that Russia would have had no reason to load a vast treasure trove on a ship it was sending into battle, and doubly so as it had a land route to its destination Vladivostok anyway.

Stocks of Jeil Steel, in which Shinil Group's founder has acquired a large share, skyrocketed, only to fall by 20 percent on Thursday and another 30 percent on Friday.

"Concerning the treasure ship salvage project, investors' discretion is recommended as there are risks of them suffering great losses if they rely on rumours," the Financial Supervisory Service said in a statement.

"Spreading false informations or groundless rumours about the 'treasure ship' salvage can be subject to a criminal punishment," it added.

It noted that investors already suffered great losses in 2003 when the bubble burst and Donga Construction Co., which claimed the discovery of the "treasure ship", went belly-up.

The warning came with Shinil Group reportedly selling virtual coins to investors, promising huge returns after salvaging the ship, which it said was at a depth of more than 1,400 feet (426 metres).

Shinil Group said it had found an imperial Russian vessel off Ulleung Island which was believed to contain gold bullion and coins worth 150 trillion won ($130 billion)

Fishing boats anchored at the main port on South Korea's Ulleung Island, in the Sea of Japan, on November 7, 2008