Attorney C

However, the execution of the above punishment shall be suspended for three years from the date this judgment became final and conclusive.

【Criminal Power】

On October 28, 2010, the defendant was sentenced to four years in Seoul High Court to imprisonment with prison labor for the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation), and the judgment was finalized on March 10, 2011.

【Criminal Facts】

1. Status of the defendant;

피고인은 ① 금연보조제 제조·판매업 등을 목적으로 하는 법인인 주식회사 D(비상장, 이하 'D'라고 한다), ② 담배 제조·판매업 등을 목적으로 하는 법인인 E 주식회사 (비상장, 이하 'E'라고 한다), ③ 컴퓨터 장비 생산업체로서 코스닥상장법인인 F 주식회사를 2008. 6.경 인수하여 그 무렵 사업목적에 담배 판매도매업 등을 추가하고 사명을 변경한 법인인 G 주식회사(이후 H 주식회사로 다시 사명 변경, 이하 'G'라고 한다), ④ 담배 판매도매업 등을 목적으로 하는 법인인 | 주식회사(이하 'I'라고 한다) 등 4개 회사를 설립·인수하여 운영하면서 위 회사들의 경영 전반을 총괄하였고, 2008. 10. 24.부터는 I의 대표이사로 재직하였다.

After August 29, 2008, the Defendant controlled the entire company through D, by owning 32.72% of D’s shares, D 100% of D’s shares, I shares 29.84% of G, and G 10.3% of E’s shares.

2. Use of undisclosed information;

(a) Where any executive, employee or major shareholder (or any executive or employee if the major shareholder is a corporation) of an act-prohibited corporation, listed corporation or KOSDAQ-listed corporation becomes aware of material information which is undisclosed to the public in connection with the business, etc. of such corporation in connection with the sale and purchase or other transaction of securities issued by such corporation, he/she shall not

B. Around October 27, 2008, the Defendant, who was working as the representative director of I, a major shareholder of G, was in office as above, and around October 27, 2008, had been aware that D’s maturity of bills (D issuance, G endorsement, face value KRW 2.7 billion) offered as security during the process of extending the repayment of loans by future mutual savings banks, arrives on November 2, 2008, and the future mutual savings banks demand repayment of KRW 2.7 billion at maturity when refusing the demand of G to extend the maturity of the said bills. Since D or G was not a financial situation at which D or G would be able to pay the said bills at maturity, the Defendant became aware of the important information that the payment would ultimately be refused if the future mutual savings bank would pay the said bills at maturity.

When the Defendant became aware of this, G’s financial status, such as Cho Man-man, was anticipated to decline at the market, using the above information that is not disclosed to the general public, and disposed of G’s shares to avoid losses, and on October 27, 2008 and December 28, 2008, the Defendant demanded to return the remaining amount to 30,000 won to be appropriated for redemption of borrowed shares by disposing of the mortgaged shares in the market on the same day from the above J on the 27th day of 28th day of 7th day of 10,000 won, and upon the Defendant’s request on October 30, 2008, the Defendant sold 250,000 won of G shares to the 196th day of 18th day of 28th day of 20,000 won of G shares to the 196th day of 18th day of 208,000 won of the said G shares to the 168th day of 288th day of m.

E. Conclusion

Accordingly, the defendant, who is the representative director of the KOSDAQ-listed corporation, violated the Securities and Exchange Act by selling and buying securities using important information that is not open to the public.

Summary of Evidence

1. Partial statement of the defendant;

1. Each legal statement of a witness, L or K;

1. Each legal statement of the witness M, N and J;

1. Each prosecutor's statement of 0, P and Q;

1. Each written reply to the Financial Supervisory Service to R, S, and T;

1. An investigation report (in cases of attaching publicly announced data related to the default on payment of D outstanding bills by stock companies, attaching a written agreement on loans of stock security, remittance or transfer slips, etc., G stock price status, and hearing of statements by witnesses;

1. Copy of the corporate register, certified transcript of corporate register, G new corporation register, and H stock company register;

1. Results of the survey and disposal of G stocks;

1. Details of sale of stocks G by the bond business operator, etc., details of the account subject to the investigation, and details of calculation of loss avoidance;

1. Five copies of a written agreement on loans for stock security, receipts, etc.;

1. The current status of the G share price (Evidence No. 52) and the current status of G share price (Evidence No. 61);

1. The details of the financial transactions for entering and withdrawing national banks;

1. Copies of the agreement on stock-backed loan, etc. of the evidence record No. 2009Gohap400, copies of the evidence record No. 2009Gohap 400, the copy of the evidence record No. 2009Gohap400, and the copy of the evidence record No.

1. Previous convictions: Residents' and criminal records, inquiry into criminal records, investigation reports (Attachment to the judgments on crimes A related to the suspect, attachment to the judgments on crimes A), the judgments of the first instance court (2009Gohap400, 2010Gohap138), the judgments of the second instance (2010-1281), and the judgments of the Supreme Court 2010Do15326;

Application of Statutes

1. Article applicable to criminal facts;

Articles 207-2 (2) 2, 207-2 (1) 1, and 188-2 (1) of the former Securities and Exchange Act (amended by Act No. 8635 of Aug. 3, 2007 and repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act (amended by Act No. 10259 of Apr. 15, 2010), the main sentence of Article 42 of the former Criminal Act (amended by Act No. 10259 of Apr. 15, 201)

1. Handling concurrent crimes;

The latter part of Article 37 and Article 39(1) of the Criminal Act

1. Discretionary mitigation;

Articles 53 and 55(1)3 of the Criminal Act (The following consideration for the reasons for sentencing):

1. Suspension of execution;

Judgment on the assertion of the defendant and his defense counsel under Article 62(1) of the Criminal Act (hereinafter referred to as "the grounds for sentencing"),

1. Summary of the assertion

A. The Defendant was unable to know at the time of October 27, 2008 that D was issued as collateral in the process of extending the repayment period of the loan from the future mutual savings bank and that the bill of exchange worth KRW 2.7 billion (hereinafter “the bill of this case”) endorsed by G (hereinafter “the nonpublic information of this case”) would be refused at maturity (hereinafter “the nonpublic information of this case”).

B. The Defendant only has left the J as a collateral, and there is no fact that he either disposes of the G shares and appropriated it for the repayment of the loan, and requests the J to return the remaining money. In order to raise the company’s emergency funds, the Defendant was merely granted a loan of G shares as collateral, and there was no purpose to avoid losses using the material nonpublic information in this case.

2. Determination

A. Whether to recognize material nonpublic information of this case

In full view of the following circumstances acknowledged by the evidence duly adopted and examined by the court, there is no lack to recognize the fact that the defendant knew of the material nonpublic information of this case around October 27, 2008, as stated in the facts constituting the crime in the judgment of the court. Thus, this part of the defendant's assertion is without merit.

1) D has been granted a loan of KRW 10 billion on November 2, 2007 from the future mutual savings bank, and KRW 10 billion on December 14, 2007, with the maturity of three months, and the maturity of the loan has been extended four times on October 2, 2008. At the request of the future mutual savings bank on October 2, 2008, D repaid KRW 300 million, which is part of the above loan of KRW 3 billion. When providing the Promissory Notes as security, D extended the maturity of KRW 2.7 billion ( = KRW 3 billion - KRW 300 million) from October 2, 2008 to November 2, 2008, and the future mutual savings bank did not repay the Promissory Notes on November 2, 2008, the maturity of which has been extended on November 35, 203 (the face evidence of this case).

2) From the due date of the Promissory Notes (No. 2, 2008), S, the head of G’s financial team, asked to contact U branch and Vice-head of the branch and sub-branch of the future mutual savings bank and extend the due date of the Promissory Notes several times from the due date of the Promissory Notes (No. 4, 5, 2008), but T refused the above request, and S delivered such fact to the Defendant (Evidence No. 319 pages).

3) At the time of the above company, D was liable for a loan of KRW 2 billion to Franchis Savings Bank other than the above future mutual savings bank. On September 29, 2008, E and G was practically failed to pay wages to its executives and employees for shares issued by public offering around September 29, 2008 (Evidence Record 303 pages, 321 pages, 395). In light of the financial situation at the time of each of the above companies, it was difficult to say that the instant bill was paid at maturity. Considering that the Defendant, who actually operated each of the above companies, concluded a delegation contract with an attorney with respect to E’s rehabilitation procedure on November 11, 2008, and received counseling prior to the conclusion of the contract (Evidence Record 328, 611, 611, and 8). The Defendant was well aware of the fact that D, E and G received counsel about the procedure for the examination of witness from the attorney-at-law prior to the conclusion of the contract.

4) Although the maturity of the Promissory Notes extended from November 2, 2008 to November 14, 2008, considering the fact that D did not pay the principal of the instant loan with the exception of the said KRW 300 million and did not pay interest payment after November 2, 2008 (Evidence No. 359 pages), the size of the instant loan and the rate of repayment, the developments leading up to the extension of the maturity period and the number of times, etc., the circumstance that partial extension of maturity of the Promissory Notes does not interfere with the Defendant’s view that the Defendant was aware of the material nonpublic information of the instant case around October 27, 2008.

B. In full view of the following circumstances acknowledged by the evidence duly adopted and examined by the court whether the Defendant requested the J to dispose of G shares or not, it is recognized that the Defendant requested that the Defendant dispose of the secured shares and dispose of them as collateral and return the remaining money after appropriating them to repay the borrowed money, as stated in the facts constituting the crime. Therefore, this part of the Defendant’s assertion is without merit.

1) On January 10, 2008, the Defendant, via J, borrowed KRW 250,000,000,000 from G shares as security (Evidence No. 434 pages), provided to V on October 28, 2008, as security, KRW 500,000,000 of G shares as security, and provided to W 1.9 billion of G shares as security, KRW 350,000,000 of each G shares as security (Evidence No. 435 to 438 of the evidence record, 17 to 199 of the additional evidence record).

The defendant asserts that each of the above creditors' shares were sold at will under the direction of J and paid the borrowed money to the defendant for the sale price. However, it is hard to accept in light of the empirical rule that the defendant, who was urgently required to raise funds at the time, provided a large amount of security up to 11.6 million won of G shares, received the borrowed money after the lapse of the loan. ② On October 28, 2008 with the defendant's delegation, M, who entered into a loan contract with a total of KRW 1.5 billion amount of KRW 1.5 billion, prepared a receipt that received KRW 1.57 billion on the same day (Evidence record 4.47 pages), and the above M, in light of the fact that the borrowed money was paid on October 28, 2008, it is difficult to view that the defendant prepared a receipt after confirming that the borrowed money was paid at 1.48 billion won of the borrowed money from 208 to 3.48 billion won of the borrowed money (which is hard to see the defendant's 16.4 billion won of the evidence of 208.18.18.138.18.

2) In addition, the share price of G shares offered by the Defendant as security was maintained at a higher level than the share price as of the date of borrowing during the period of sale specified in the attached list of crimes (Evidence No. 703 pages). Each of the above creditors appears to have received advance interest on the borrowed amount from the Defendant (Evidence No. 434 to 438, 17 through 19, 43 pages of the evidence record), the agreed share security ratio is maintained, and even in the absence of the maturity date, the J or each of the above creditors cannot be deemed to have arbitrarily sold G shares offered as security, even though they did not have any particular interest on them.

3) Meanwhile, on October 31, 2008, N transferred 970 million won (Y 220 million won, X 50 million won, and N 250 million won) out of the proceeds from sale of G shares offered as security to G account, to G account (Additional Evidence Records 109 through 111, 115 pages), 208, 100, 31, 100 won was released from G account to A 150 million won, and the Defendant appears to have received 1050 million won from G 160,000 won (the additional Evidence No. 112 to 114 of the Additional Evidence No. 1150, 2008). The Defendant appears to have received 105 billion won from G 160,000,000 won (the additional Evidence No. 112 to 1050,000 won).

4) As to the disposal of G stocks offered as security, the Defendant made a statement to the effect that he or the above creditors were liable for or did not raise any objection to the disposal of G stocks offered as security, and that the prosecutor’s investigation made a statement to the effect that he or she sold the stocks as security to J through AC and Q from October 208 (Evidence No. 627 pages). Since then, the Defendant made a false statement with the intent to impose a fine (Evidence No. 627 pages). However, as seen earlier, it is difficult to understand the contents of the Defendant’s statement after the reversal as seen earlier, and the J made a statement to the effect that it is clear that the agreement with the Defendant was made (the record of the examination of the witness J) consistent with the above confession of the Defendant, in light of the fact that the agreement with AC was made, the credibility of the Defendant’s statement at the investigative agency is recognized.

1) Relevant legal principles

In the event that the sale or purchase of specific securities, etc. or any other transaction was conducted while recognizing material nonpublic information, barring special circumstances, if it is acknowledged that such transaction was not conducted solely due to material nonpublic information, such transaction may be deemed to have been conducted using material nonpublic information (see Supreme Court Decision 2016Do10313, Jan. 12, 2017).

2) Specific determination

Based on the above legal principles, it is recognized that the Defendant requested that the Defendant dispose of the mortgaged stocks as collateral and dispose of the mortgaged stocks and return the remaining funds after appropriating them to repay the borrowed funds with the recognition of the material nonpublic information of this case around October 27, 2008. The Defendant would have attempted to raise funds in the most easy way, such as disposal of stocks before the redemption of the G stocks due to material nonpublic information of this case. Considering the fact that the Defendant borrowed the funds as collateral and requested the disposal of the stocks without any need to request the Defendant’s disposal of the stocks. Considering the fact that the Defendant used the funds to repay the borrowed funds to repay the borrowed funds by disposing of the secured stocks, and the Defendant intended to actually use the funds for the purpose of raising the company’s urgent disposal of the stocks, even if the Defendant intended to use the funds for the purpose of raising the company’s urgent disposal of the stocks, it is reasonable to deem that the Defendant actually intended to use the funds.

Therefore, we cannot accept all the above arguments of the defendant and his defense counsel.

1. Reasons for sentencing: Imprisonment with prison labor for a year and six months to seven years;

2. Non-application of the sentencing criteria: Since the sentencing criteria are concurrent crimes under the latter part of Article 37 of the Criminal Act, it shall not apply.

3. Determination of sentence: The crime of this case, one year and six months of imprisonment, and three years of suspended execution, is a case where a defendant sells stocks using undisclosed information that he had learned in the course of performing his duties and thereby evades losses exceeding KRW 1.6 billion, and the amount of loss avoidance is not only a large amount, but also a case where the fairness and reliability of the capital market is harmed. However, the crime of this case is a favorable situation such as the fact that the defendant would have used most of the sales price of stocks to repay his obligations to the company, and the crime of this case is a concurrent crime under the latter part of Article 37 of the Criminal Act with the crime of violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation of Trust) in which the judgment becomes final and conclusive, and the punishment is necessary to be determined in consideration of equity in the case at the same time, and the defendant's age, character and behavior, environment, motive of the crime,

Judge Lee Sang-hoon

Judges Park Il-young

The purpose of avoiding loss is not a separate constituent element (if the amount of unfair profit or loss avoidance is more than 500 million won, only the amount shall be subject to aggravated punishment).

The defendant's assertion that there was no intention to use the material nonpublic information of this case is the primary purpose of avoiding loss.

Determinations shall be made.