[2] The meaning of "the purpose of inducing the trading transaction" under Article 188-4 (2) of the Securities and Exchange Act as to the prohibition of market price manipulation, etc. and the meaning of "the trading that misleads a person into believing that the trading of securities under subparagraph 1 of the same paragraph constitutes a active trading or causes a change in the market price," and the criteria for determining whether the trading constitutes such a trading

[3] Requirements and method for the establishment of a public contest relationship

[4] The court's trial method where a prosecutor was indicted by applying the proviso of Article 207-2 of the former Securities and Exchange Act

[5] The legislative intent of Article 254(4) of the Criminal Procedure Act and the specific extent of the facts charged

[6] The case holding that the facts charged against the crime of violating the prohibition of using undisclosed information under the Securities and Exchange Act cannot be deemed as specified

[7] The case holding that the prosecutor's sentence of punishment under the proviso is unlawful in violation of the principle of non-acceptance of interest, although the prosecutor was deemed to have been prosecuted by applying only the main text of Article 207-2 of the former Securities

[2] The term "purpose of inducing a transaction" under Article 188-4 (2) of the Securities and Exchange Act refers to the transaction that is likely to cause an artificial change in the market price and the price of securities in accordance with the normal supply and demand of securities in accordance with the general supply and demand of the securities market, and the purpose of inducing investors to make the transaction by misunderstanding that the market price has been formed by the natural supply and demand principle on the securities market. The term "transaction that misleads investors as if the trading price of securities under subparagraph 1 is causing a rush or a change in the market price" refers to the transaction that is likely to cause an artificial change in the market price and trading volume to be formed in the free competition market due to other factors not attributable to the market cause. Whether it is so determined shall be determined by comprehensively taking into account the nature of the securities and the total number of securities issued, the motive and type of the securities transaction, the trend of the market price, the previous

[3] In the case of accomplices who are co-processed in collusion with more than one person, the conspiracy does not require any legal punishment, but is sufficient if there is an implied communication of the co-offenders directly or indirectly with respect to the joint execution of the crime, and even if there is no direct evidence, it can be recognized by the circumstantial facts and empirical rules.

[4] Under the proviso of Article 207-2 of the former Securities and Exchange Act (amended by Act No. 6695 of Apr. 27, 2002), the part of the elements for a fine exceeding 20,000 won is to impose a fine of more than 20,000 won. Thus, in a case where a prosecutor files a prosecution by applying the proviso of Article 207-2 of the same Act, the court must first examine whether the profit gained or loss avoided from the violation as stated in the facts charged is recognized, and then determine a sentence by applying the above proviso. If part of the profit or loss avoided from the violation is not recognized, the court must determine whether to apply the above proviso.

[5] The purport of Article 254(4) of the Criminal Procedure Act stipulating that "the facts charged shall be stated clearly by specifying the date, time, place, and method of a crime," is to ensure the efficiency and speed of a trial by limiting the object of a trial, and to facilitate the exercise of defense rights by specifying the scope of defense and facilitate the exercise of defense rights of the defendant. As such, the prosecutor, as a prosecutor, shall include specific facts that constitute the elements of a crime, so that it can be distinguished from other facts by taking into account the three characteristics

[6] The case holding that the facts charged cannot be deemed as specified on the ground that specific facts charged about when and how to use the undisclosed information, among the facts charged regarding the crime of violating the prohibition against the use of undisclosed information under the Securities and Exchange Act, are not clearly stated

[7] The case holding that since the indictment does not specify the profits gained by the defendant due to the violation of the prohibition against using undisclosed information, and does not include the transaction amount that can calculate the profits amount, and since the indictment was not changed after the prosecution, it should be deemed that the prosecutor was indicted only for the violation of the main sentence of Article 207-2 of the former Securities and Exchange Act (amended by Act No. 6695 of April 27, 2002) with regard to the use of undisclosed information by the defendant, the court below's sentence under the proviso is unlawful due to the violation of the principle against the principle of no accusation.

A. As to Defendant 2’s assertion of violation of the rules of evidence and misapprehension of the legal principle

(1) In order to establish a crime of violation of Article 188-4 (1) of the Securities and Exchange Act, "the purpose of leading another person to make a wrong judgment" should be 'the primary purpose is to mislead or mislead other person to make a wrong judgment' as a subjective requirement, in addition to the facts of the collusion or the disguised sale and purchase. This purpose is not an issue as to whether the other purpose exists or is the main purpose of the transaction. The degree of awareness of its purpose is sufficient if there is do not require active desire or conclusive recognition, and whether there was an actual misunderstanding of investors, or whether there was damage to other person. (See Supreme Court Decision 201Do3567, Nov. 27, 2001.). In addition, "the purpose of inducing the trading" as provided in Article 188-4 (2) of the Securities and Exchange Act is to make an artificial manipulation in the market price and to make another person misunderstand or to make a false judgment based on the natural demand and supply trend of securities market price at the time of the sale and purchase."

(2) In light of the above legal principles and records, the court below determined that the defendant 2 made an irregular transaction in order to increase the market price by artificially manipulating the share price of the non-indicted corporation, and that it was derived from the purpose of causing general investors to mislead them as promising the shares of the company, thereby inducing them to trade the shares. The court below affirmed the judgment of the court of the first instance which found Defendant 2 guilty of all the charges of violating the rules of evidence or misunderstanding the legal principles as to Article 188-4 of the Securities and Exchange Act, as alleged in the grounds of appeal.

B. As to Defendant 1’s assertion of violation of the rules of evidence and misapprehension of the legal principle as to joint principal offenders

(1) In the case of accomplices who are co-processed in collusion with more than one person, the conspiracy does not require any legal punishment, but is sufficient if there is an implied communication on the joint execution of the crime directly or indirectly between the accomplices, and even if there is no direct evidence, it can be recognized by the circumstantial facts and empirical rules (see Supreme Court Decision 2002Do868, Jun. 28, 2002).

(2) In light of the above legal principles and records, the court below is just in finding that Defendant 1, while Defendant 2 et al. were engaged in unfair trade practices, such as price manipulation, was jointly processed through Defendant 2 in order or impliedly or through Defendant 2 from September 2001. Although Defendant 1 did not make specific orders regarding the unfair trade in this case, the court below determined that Defendant 2 et al. was liable as joint principal offender for the unfair trade in this case. There is no error of law by misunderstanding facts due to violation of the rules of evidence or by misapprehending the legal principles on joint principal offender, as alleged in the grounds of appeal.

C. As to the application of the proviso of Article 207-2 of the former Securities and Exchange Act

Article 207-2 of the former Securities and Exchange Act (amended by Act No. 6695 of Apr. 27, 2002; hereinafter the same shall apply) provides that "any person who violates the provisions of Article 188-2 (1) or (3) and any person who violates the provisions of Article 188-4 shall be punished by imprisonment for not more than 10 years or by a fine not exceeding 20 million won: Provided, That if the amount equivalent to three times the profit gained or loss avoided by the violation exceeds 20,00 won, he shall be punished by a fine not exceeding the amount equivalent to three times the profit or loss amount evaded by the violation, and therefore, the part of the constituent elements of a fine not exceeding 20,000 won shall be imposed."

Therefore, in a case where a prosecutor institutes a prosecution by applying the proviso of Article 207-2 of the former Securities and Exchange Act, the court must first examine whether the profit gained or loss avoided by a violation as stated in the facts charged is recognized, and then determine the punishment by applying the above proviso. If part of the profit gained or loss avoided by a violation as stated in the facts charged is not recognized, it shall be pointed out that it shall indicate the judgment thereof and determine whether to apply the above proviso.

2. Determination on the violation of the prohibition on the use of undisclosed information

A. Part concerning the acquisition of treasury stocks and the issuance of overseas bonds with warrants

(1) On September 20, 2001, Defendant 1, the representative director of the non-indicted corporation, notified Defendant 2 of the fact that he would acquire the treasury stocks in order to increase the share price in the non-indicted corporation, notified Defendant 2 of the fact that he would issue the foreign bonds with warrants at the end of October of the same year, and let Defendant 2 use important information that was not disclosed to the public for the trading of the non-indicted corporation’s stocks. Defendant 2 accepted the facts charged that he used the non-indicted corporation’s stocks for the trading of the non-indicted corporation after being provided with non-public information from Defendant 1 twice and used it for the trading of the non-indicted corporation’s stocks.

(2) However, it is difficult to accept the above determination by the court below for the following reasons.

Article 254 (4) of the Criminal Procedure Act provides that "The facts constituting the crime charged shall be stated clearly by specifying the date, time, place, and method of a crime." The purpose of Article 254 (4) of the Criminal Procedure Act is to ensure the efficiency and speed of the trial by limiting the object of the trial, and at the same time to facilitate the exercise of defense by specifying the scope of defense, and thereby to facilitate the exercise of defense by the defendant. As a prosecutor, a specific fact that constitutes the elements of a crime should be stated in order to distinguish the facts by comprehensively considering the three characteristics of the above three. (See Supreme Court Decision 2001Do506, Apr.

In light of the above legal principles, the facts charged on the acquisition of the Defendants’ treasury stocks and the use of undisclosed information on overseas bonds with warrants cannot be deemed as having been specified in the facts charged because specific criminal facts on when and how Defendant 2 used the undisclosed information provided by Defendant 1 for sale and purchase transaction cannot be viewed as having been lawful indictment, and thus, the court below accepted the facts charged and found the Defendants guilty in all of the above facts charged shall be deemed to have committed an unlawful act of misapprehending the interpretation and application of Article 254(4) of the Criminal Procedure Act, and it shall be deemed to have affected the conclusion of the judgment.

B. As to the part of the fine imposed on Defendant 1

(1) The court below found Defendant 1 guilty of the facts charged regarding Defendant 1’s use of undisclosed information about capital increase without compensation, in addition to the use of undisclosed information about the acquisition of the above company stocks and the issuance of overseas bonds with warrants, and applied Articles 207-2 subparag. 1 and 188-2(1) of the former Securities and Exchange Act to both the above acts, and imposed both imprisonment and a fine of KRW 500 million on the same Defendant (the court below imposed both imprisonment and a fine of KRW 20 million on Defendant 1 in relation to the violation of the prohibition of unfair trade, such as market price manipulation under Article 188-4 of the Securities and Exchange Act, and the fine of KRW 20,000 or more on Defendant 2,000 or more, respectively. The court below decided that Defendant 1 was punished by imprisonment with prison labor and a fine of more than KRW 20,000,000 or more on Defendant 1.

(2) However, it is difficult to accept the lower court’s concurrent imposition of a fine of not less than 20 million won for the following reasons with regard to Defendant 1’s violation of the prohibition against using undisclosed information under Article 188-2 of the Securities and Exchange Act.

Article 207-2 subparagraph 1 of the former Securities and Exchange Act provides that "any person who violates the provisions of Article 188-2 (1) shall be punished by imprisonment for not more than 10 years or by a fine not exceeding 20 million won: Provided, That if the amount equivalent to three times the profit gained or the loss avoided by the violation exceeds 20,000 won, he shall be punished by a fine not exceeding the amount equivalent to three times the profit or the loss amount avoided." Thus, the fact that the amount equivalent to three times the profit or the loss amount derived from the violation of the prohibition on the use of undisclosed information under Article 188-2 (1) of the Securities and Exchange Act exceeds 20,000 won is part of the elements of a fine to be imposed by a fine not less than 20,000 won, and under the principle of non-disclosure, the court may not judge it unless the prosecutor has instituted a public prosecution as to the proviso of

However, the indictment of this case does not specify the profits gained by Defendant 1 from the violation of the prohibition of using undisclosed information, and furthermore, it does not include the transaction amount that can calculate the profits amount, and since the indictment has not been changed after the prosecution, it shall be deemed that Defendant 1's indictment was made only for acts violating the main sentence of Article 207-2 of the former Securities and Exchange Act with regard to Defendant 1's use of undisclosed information, and therefore, it shall not be concurrently punished by a fine exceeding KRW 20 million with regard to Defendant 1's use of undisclosed information, etc., but it is obvious that the court below committed an unlawful act of judgment on the fact that Defendant 1's use of undisclosed information was not prosecuted in violation of the principle of no accusation, and this affected the conclusion of the judgment (see Supreme Court Decision 2002Do2215, Nov. 28, 2003).

In addition, when the court below intends to concurrently impose a fine of 20 million won or more with respect to Defendant 1’s use of undisclosed information by applying the proviso of Article 207-2 of the former Securities and Exchange Act, it should be deliberated and decided that the amount equivalent to three times the profit accrued or the loss avoided by the violation exceeds 20 million won. In light of the record, even though it cannot be seen that the profit accrued or the loss avoided by Defendant 1 in relation to Defendant 1’s use of undisclosed information of this case is much known, the court below’s concurrent imposition of a fine of 20 million won or more without examining the case.

3. As to Defendant 2’s assertion of unreasonable sentencing

In this case where a sentence of imprisonment with prison labor for less than ten years and a fine is imposed, the reason that the sentencing was erroneous cannot be a legitimate ground for appeal.

4. The crime of violation of the prohibition of using undisclosed information which the court below found the Defendants guilty and the remaining parts of the crime are concurrent crimes under the former part of Article 37 of the Criminal Act and sentenced to concurrent punishment. Therefore, all of the judgment below against the Defendants should be reversed.

Therefore, the part of the judgment of the court below against the Defendants is reversed, and that part of the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices on the bench

Justices Jack-dam (Presiding Justice)