When the defendant fails to pay the above fine, the defendant shall be confined in a workhouse for the period converted by 50,000 won into one day.

The defendant shall be ordered to pay an amount equivalent to the above fine by provisional payment.

Of the facts charged in this case, it is not guilty of violating the Financial Investment Services and Capital Markets Act due to the use of material nonpublic information

1. Around December 15, 2010, the Defendant participated in the allocation of Nonindicted Co. 1’s shares to a third party; the Defendant held 4,590,359 shares of Nonindicted Co. 1; and the Defendant held 5,825,243 shares of Nonindicted Co. 2’s Defendant and Nonindicted Co. 2’s shares; and the total share ratio of the Defendant and Nonindicted Co. 2’s shares led to 19.86%. Nevertheless, around December 23, 2010, the Defendant reported Nonindicted Co. 2 to the Financial Services Commission, etc. as its representative, submitted a report on the current status of shares, etc. of Nonindicted Co. 1’s shares to Nonindicted Co. 2 as the auditor of Nonindicted Co. 2 and 197,50 shares owned by Nonindicted Co. 9, the Defendant’s wife, and Nonindicted Co. 10,168 shares owned by Nonindicted Co. 19,990 shares owned by the Defendant.

2. On June 27, 2012, the Defendant submitted a report on the holding of stocks, etc. to Nonindicted Co. 1 to the Financial Services Commission, etc. on or around June 27, 2012, the Defendant failed to file a report on the holding of stocks, etc. by omitting the aforementioned Nonindicted Co. 9’s holding 197,50 shares, 16,168 shares, and 19,90 shares owned by said Nonindicted Co. 11.

3. On October 4, 2012, the Defendant submitted a report on the holding of stocks, etc. to Nonindicted Co. 1 to the Financial Services Commission, etc., and failed to file a report in violation of the duty to report the holding of stocks, etc. by omitting the aforementioned Nonindicted Co. 9’s holding 197,50 shares, 16,168 shares, and 19,90 shares owned by the said Nonindicted Co. 11.

1. A report on the status of stocks held in bulk;

1. An application, etc. for opening a comprehensive trading account;

Each of the Financial Investment Services and Capital Markets Act No. 445(20), Article 147(1)(1) of the Financial Investment Services and Capital Markets Act

2. Aggravation for concurrent crimes;

Article 37 (former part), Article 38 (1) 2, and Article 50 of the Criminal Act

3. Detention in a workhouse;

Articles 70 and 69(2) of the Criminal Act

4. Order of provisional payment;

Article 334(1) of the Criminal Procedure Act

[The background of promoting sale of management rights through the allocation of capital increase with capital increase by a third party by a non-party 1 corporation]

Nonindicted Co. 1 (hereinafter referred to as “Nonindicted Co. 1”) was a corporation established on April 7, 198 for the purpose of manufacturing and selling, etc. of the official work machinery numerical control equipment, which was listed on the KOSDAQ on April 22, 1997, but it was discovered that the window dressing accounting, etc. of representative director was exposed on September 18, 2005, and the creditor financial institution’s joint management was commenced since October 18, 2005.

around December 11, 2009, Non-Indicted Company 1 extended the repayment grace period of approximately KRW 20.1 billion to December 31, 201, but concluded a "agreement on the performance of management normalization" with the purport that the repayment of debts above KRW 4 billion at the time of failure to perform self-help plan during the year 2010, but on the end of the quarter of March 2010, Non-Indicted Company 1 failed to implement the cyber security development project that was promoted as a new project in around 2010, and 6.2 billion won for losses on the end of the quarter of March 2010, and 41.6% for capital erosion rate, it became difficult for Non-Indicted Company 1 to extend the repayment of debts and to expect corporate rehabilitation. Accordingly, Non-Indicted Company 1's management has promoted the sale of management rights through the allocation of new shares for capital increase.

【Promotion of Contracts for Allocation of Capital Increase to Third Party by Non-Party 1】

The Defendant, on November 12, 2010, participated in the allocation of Nonindicted Co. 1 to a third party in the amount of KRW 5 billion and acquired the right of management of Nonindicted Co. 1’s company by acquiring the right of management, acquired the shares of Nonindicted Co. 3 with the funds for capital increase with capital increase, and continued negotiations with Nonindicted Co. 4 and several times with Nonindicted Co. 1. Accordingly, on November 25, 2010, the Defendant requested Nonindicted Co. 1 to evaluate the common share value of Nonindicted Co. 3’s company to the Nonindicted Co. 6’s accounting firm on or around November 25, 2010.

【Purchase of Stocks Using Material Nonpublic Information】

On November 29, 2010, the Defendant acquired unjust enrichment amounting to KRW 33,676,092 by purchasing 197,50 shares of Nonindicted Company 1’s 1’s 197,500 shares via the securities account in lieu of Nonindicted Company 9, using undisclosed information prior to disclosure (public disclosure on December 1, 2010) on the part of Nonindicted Company 1’s 33,676,092, by purchasing 197,50 shares of Nonindicted Company 1’s 197,50 shares via the securities account in lieu of Nonindicted Company 9.

Accordingly, the Defendant, who is negotiating the conclusion of the contract with Nonindicted Company 1, used material non-indicted 1’s shares in the process of negotiating the contract.

2. Determination

A. The summary of the facts charged is that “Nonindicted Co. 1 created material non-indicted 1’s “large-scale capital increase and expected to change its largest shareholder” around November 25, 2010, and the Defendant negotiated an underwriting contract with Nonindicted Co. 1 and purchased the shares of Nonindicted Co. 1 in the name of the wife, around November 29, 2010, using such material non-indicted 9, which was known to him in the process.” Accordingly, the prosecutor sought the application of Article 174(1) of the Financial Investment Services and Capital Markets Act (hereinafter “Capital Markets Act”) and sought the application of Article 174(2).

B. In light of the following circumstances, the evidence submitted by the prosecutor alone is insufficient to acknowledge the facts charged, and there is no other evidence to acknowledge it.

1) There is no doubt that the information called “large-scale capital increase and anticipated change in the largest shareholder” of Nonindicted Company 1 constitutes material nonpublic information. However, in this case, the Defendant is not a person who has intentionally acquired such material nonpublic information in a passive and indirect manner, but rather a person who has generated such information actively and actively. In light of the following circumstances, it is very careful approach is necessary to recognize the use of material nonpublic information. ① The use of material nonpublic information is a legal person, not a natural crime, and its punishment range depends on the legislative policy-level determination. In fact, the issue of whether to punish the use of material nonpublic information and its scope differs from the specific circumstances of each country, and Korea also adjusts the scope of punishment through continuous legal revision. Considering the above circumstances, there is no need for more strict interpretation on the issue of punishment of the person who has already acquired material nonpublic information in question, on the sole basis of the fact that the Defendant had no knowledge of the fact that there is a status to create the pertinent information and thus, it can be said that there is no need to ex officio ex officio an amendment with the person.

2) Also, in light of the following circumstances, the acquisition decision of the instant company seems to have been made on November 30, 2010 or around December 1, 2010 (i.e., it is difficult to readily conclude the time when the material non-indicted 1 was created on November 25, 2010). ① Nonindicted 4, who was very poor as an ancient line, was actively faced with the intention of acceptance of the Nonindicted Company 1 from November 2010, and the Defendant continued to refuse the acquisition decision. ② The acquisition method indicated in the facts charged, namely, the acquisition method by Nonindicted Company 1, as well as the acquisition method by Nonindicted Company 1, the representative director at the time of Nonindicted Company 1, 200,000 won, was devised to persuade the Defendant, and the Defendant did not make a public announcement of the acquisition decision of Nonindicted Company 1, 200,000 won at the time of the above acquisition at the time of Nonindicted Company 1, 201.

3) Meanwhile, in light of the following circumstances, it is doubtful whether the Defendant’s acquisition of the instant shares can be seen as an act using material nonpublic information. ① The Defendant has continuously acquired the shares of Non-Indicted Party 1 in the name of not only himself but also his family (the wife Non-Indicted 9, Non-Indicted 10, and Non-Indicted 11) before the purchase of the instant shares. ② The shares additionally acquired by the Defendant around November 29, 2010 are merely 0.46% (197,50 shares/42,748,05 shares) of the total number of the shares issued by Non-Indicted Party 1 at the time of the acquisition of the instant shares. ③ The Defendant used the name of Non-Indicted Party 9, which is not a new third party in the acquisition of the instant shares, as an existing shareholder, rather than a new third party, and used only the disposal price of the shares issued by another company (○○○) without any further mobilization. ④ The Defendant also held the shares as above up to 10 weeks.

3. Conclusion

Thus, this part of the facts charged is without proof of crime, so it is not guilty under the latter part of Article 325 of the Criminal Procedure Act.

[Attachment]

Judges Compensation Board

1) The crime of violation of each of the above obligations is identical with repeated omission, and there is room to regard it as a single crime. However, according to the language and text of Article 147 (1) of the Financial Investment Services and Capital Markets Act, the crime of violation of the above obligation to report is not established for each of the matters to be reported, but established at each time of report, and the crime of violation of the above obligation to report is based on the premise that the new obligation to report is imposed on each of the matters to be reported at each time. Therefore, it is reasonable to see that each of the above violations of the obligation to report is in the relation of concurrent crimes.

Note 2) The instant case was prosecuted on July 17, 2013. As seen below, the Capital Markets Act was partially amended by Act No. 11845 on May 28, 2013 and enforced August 29, 2013. The Act applicable to the instant case is Article 174(1) of the former Act prior to the said amendment.

3) As to the foregoing, the Seoul High Court Decision 2011No441 Decided July 8, 201 can be seen (the foregoing Decision is currently pending in the Supreme Court Decision 2011Do9457 Decided the present Supreme Court) - In the case of “information being known”, unlike the interpretation where “information is received” (see Supreme Court Decision 2003Do686, Nov. 14, 2003), it shall be interpreted that the information existing in the process of the creation of the information is included not only in cases where the information already generated was received in a passive manner in light of the language and purpose of legislation, but also in cases where the information is actively or jointly generated in the process of creating the information.”

(4) As to this, the Supreme Court Decision 2003Do686 Decided November 14, 2003 is an indirect reference. - “The information, as indicated in the facts charged of the instant case, is not information that △△△△ transfers the management right of △△△△△△△ by transferring the pertinent △△△△△ shares to the said Defendant, which is the information indicated in the facts charged of the instant case.” The information is not information that △△△△ was created by selling the shares owned by △△△ to the said Defendant in connection with his duties. The said Defendant is not a person who received the pertinent information from △△△△ but a party to a contract with △△△△

Note 5) The possibility of such restrictive interpretation can be examined in relation to the regulatory system on the use of material nonpublic information and the recognition of “use” as seen below in the above amendment purport.

Note 6) If the conclusion of the instant underwriting agreement was already decided around November 25, 2010, such a loan would not have been made.

Note 7) In this Court, Nonindicted 4 stated in this Court that “I knee knee kne and knee knee knee only once.”

8) The above handling of the instant underwriting agreement of Nonindicted Company 1 appears to have been conducted at the night.

9) If the Defendant intended to purchase the instant shares with any unlawful intent, he did not use a trade name that is easily related to the Defendant, as seen above, and the Defendant was able to lend KRW 1.08 billion to Nonindicted Company 1 on November 30, 2010, and did not trade the instant shares at approximately KRW 100 million as above.

Note 10) This is related to the amendment of Article 174(3) of the Capital Markets Act as seen earlier.