[2] The meaning of information subject to regulation of internal trading under Article 188-2 of the Securities and Exchange Act and the use of undisclosed information

[3] The case affirming the judgment of the court below which held that since the defendant, a major shareholder of a corporation promoting A&D (acquisition and merger through the share swap method) and the executive director, prior to the trading of convertible bonds, informed inside information to the employees in charge of the acquiring company prior to the trading of convertible bonds, the above internal information cannot be deemed to be disclosed to the above acquiring company or its asset administrator, the defendant used undisclosed internal information

[4] The meaning of and criteria for determining illegal solicitation in the crime of giving rise to breach of trust

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

[6] The meaning of and the method for determining "the purpose of inducing a trade transaction" under Article 188-4 (2) of the former Securities and Exchange Act and "the transaction that misleads a person into believing that the securities transaction constitutes a active trading or causes a fluctuation in the market price" under subparagraph 1 of the same Article of the same Act concerning the prohibition of market price manipulation, etc.

[2] In order to become a subject matter of regulation of internal trading, the information is not only an important information but also an undisclosed information that is not yet known to the general public. In light of the provisions of Article 188-2 (2) of the Securities and Exchange Act, the information is still subject to regulation of internal trading until it is disclosed by the company's intent according to the disclosure procedure stipulated by the Ordinance of the Ministry of Finance and Economy. However, if it is recognized that the transaction party's internal information, which is the subject matter of the transaction, was made well known by the parties to the transaction, it shall not be deemed that the undisclosed important information has been used. However, even if an employee of the company, who is the party to the transaction, transferred the internal information from the other party to the transaction, who is a party to the transaction, reported it to the decision-making authority or received an illegal solicitation from the party to the transaction for the intent of breach of trust to the corporation, it shall not be deemed that the aforementioned internal information was completely disclosed to the party to the transaction.

[3] The case affirming the judgment of the court below that the defendant, who is a major shareholder and executive director of a corporation promoting A&D (acquisition and merger through the share swap method), was using undisclosed inside information to the above acquiring company or its asset administrator on the ground that the defendant's internal information was not disclosed to the above acquiring company or its asset administrator prior to the trading of convertible bonds.

[4] In the crime of giving rise to breach of trust under Article 357 of the Criminal Code, an illegal solicitation means that a solicitation goes against social norms and the principle of good faith, and in determining this, a comprehensive consideration of the contents and form of the solicitation, the amount and the integrity of transactions, which are protected by the law, should be taken into account. The solicitation is not necessarily to be made explicitly and explicitly, and it is impermissible even if it is made implicitly.

[5] In relation to accomplices who are jointly engaged in a crime by more than two persons, the conspiracy does not require any legal punishment, but is only a combination of two or more persons to jointly process a crime and realize the crime. Even if there was no procedure of conspiracy, if the combination of doctors is made in order or impliedly through several persons, the conspiracy relationship is established, and even if there was no direct participation in the act of conspiracy, even if there was a person who did not directly participate in the act of conspiracy, he/she shall be held accountable as a co-principal for the act of another person. The above conspiracy may be acknowledged by the circumstantial facts and empirical rules, even if there was no direct evidence.

[6] Article 188-4 (2) of the former Securities and Exchange Act (amended by Act No. 6695 of Apr. 27, 2002) provides that "the purpose of attracting a trade transaction" is to make a fluctuation in the market price by artificially manipulating the market price, which is to mislead investors into being formed by the principle of natural demand and supply in the securities market and to make a purchase and sale of securities at the same time, not to mention whether there exists a separate purpose or any of the main purpose is. The degree of awareness of the purpose is also insufficient. In addition, the term "trade that misleads investors of knowing that the market price of securities is so active or changes in the market price" as provided in subparagraph 1 of the same Article refers to a possibility of changing the market price and trading volume to be formed in a free competition market according to normal demand and supply, and it is not necessary to determine the market price actually due to such fluctuations, and it is sufficient to determine whether there is an indirect act such as a series of changes in the market price or trading volume before and after the market price.

1. Judgment on Defendant 1’s grounds of appeal

A. As to the first ground for appeal

Article 188-2 (2) of the Securities and Exchange Act (amended by Act No. 6695 of Apr. 27, 2002; hereinafter the same) provides that "information that may have a significant impact on investors' investment decisions" refers to information that is thought to have an important value in determining whether a reasonable investor is a rational investor among "fact that may have a significant impact on corporate management, assets, etc." that is individually shown in Article 186 (1) 1 through 12 of the Securities and Exchange Act and comprehensively defined in Article 186 (1) 13 of the Securities and Exchange Act.

Examining the facts duly admitted by the court below in full view of the evidence adopted by the court below, it can be sufficiently recognized that Defendant 1 conspired with Co-Defendant 1 in collusion with Co-Defendant 1 and Co-Defendant 2 to inform Defendant 2 of the undisclosed internal information on the promotion of A&D (acquisition and merger by share swap method) and caused him to use it in the transaction of the instant convertible bonds, which are securities issued by Co-Defendant 1, and the above internal information constitutes an important information that affects ordinary investors' judgment on investment in light of its content and the above legal principles. The judgment of the court below on this part is just, and there is no error of law such as misunderstanding of facts or misunderstanding of legal principles due to violation of the rules of evidence, as otherwise alleged in the ground of appeal.

Among the allegations in the grounds of appeal, the above defendant did not inform the co-defendant 2 of the internal information of this case under the conspiracy with the court below's decision, but on the premise that the above defendant and co-defendant 2 came to know the conversation between the above defendant and the above co-defendant 2 about the above internal information, the part disputing whether to deliver the above internal information and whether the above defendant's criminal intent is a criminal defendant cannot be accepted as long as the above defendant's active involvement was acknowledged differently from the above alleged facts.

B. Regarding ground of appeal No. 2

In order to become the information subject to the regulation of internal trading, the information is not only an important information but also an undisclosed information that is not yet made known to the general public. In light of the provisions of Article 188-2 (2) of the Securities and Exchange Act, the information is still subject to the regulation of internal trading (see Supreme Court Decision 95Do467 delivered on June 29, 1995, etc.). However, if it is recognized that the parties to the transaction knew of the internal information related to securities, which is the object of the transaction, the transaction cannot be deemed to have been made using the undisclosed important information (see Supreme Court Decision 2003Do1456 delivered on June 24, 2003). However, if an employee of the company, who is the party to the transaction, transferred the internal information related to securities from the counter-party to the transaction, but it can not be deemed that the transaction was made by receiving a full request from the counter-party to the transaction or without receiving a full order from the counter-party to the transaction.

Examining the evidence adopted by the court below in light of the legal principles and records, Defendant 1, the major shareholder of Nonindicted Co. 1 and executive director of Nonindicted Co. 2, who is the above Nonindicted Co. 3, did not know of the above internal company’s internal trading of 00 billion won of the convertible bonds, and there was a problem of approval of the asset management company of Nonindicted Co. 3, which acquired an amount of KRW 4 billion in the face value of 1 billion of the convertible bonds issued around Apr. 20, 200, the above internal trading of 00 million to Nonindicted Co. 1 and Nonindicted Co. 3, who was an internal trading of 00 billion won of the above convertible bonds. However, the court below did not err by misapprehending the legal principles as to the above internal trading of 40 billion won of the above convertible bonds, and it did not require Nonindicted Co. 1 to acquire the above convertible bonds from Nonindicted Co. 3, 1, 300,000 won of the above internal trading of 1,000 won of the above convertible bonds.

C. Regarding ground of appeal No. 3

Article 357 of the Criminal Code provides that an illegal solicitation is against social norms and the principle of trust and good faith, and in determining this, a comprehensive consideration of the contents and form of the solicitation and the amount and integrity of transaction, which is the legal interest protected by the law, should be given. The solicitation does not necessarily have to be explicitly or explicitly made, and it may not be explicitly or explicitly made (see Supreme Court Decisions 95Do2090, Oct. 11, 1996; 2005Do1732, Jun. 9, 2005, etc.).

According to the records, the fact-finding of the court below that Defendant 1 and Nonindicted 4 had caused the above defendant to accept the convertible bonds of this case by inducing them to make early redemption on the part of the non-indicted 3 corporation under mutual agreement. In light of these facts and the above legal principles, the act of requesting the above defendant to execute early redemption and acceptance of the above convertible bonds in return for providing large amount of money to non-indicted 4 can be deemed to constitute an act of giving money or valuables in violation of the social rules and the good faith principle. As stated in the grounds of appeal, it is difficult to view that the above defendant was unable to refuse the above defendant's request for money or valuables for resolution of the redemption of the above convertible bonds necessary for the sex company A&D of this case. In this regard, the judgment of the court below that found the defendant guilty guilty of the crime of breach of trust of this case is justifiable, and there is no violation of law by misunderstanding the legal principles as to mistake of facts or evidence in breach of trust due to violation of the rules of evidence as alleged in the grounds of appeal.

2. As to Defendant 2’s ground of appeal

In relation to co-offenders who are jointly engaged in a crime, the conspiracy does not require any legal punishment, but is only a combination of two or more persons to jointly process a crime and realize the crime. Even if there was no process of the whole conspiracy, if the combination of intentions is made in order or impliedly through several persons, the conspiracy relationship is established, and even if there was no direct participation in the conduct, even if there was no direct participation in the conduct of the crime, the person who is not directly involved in the conduct of the crime, shall be held criminal liability as a co-principal. The above conspiracy may be acknowledged by circumstantial facts and empirical rules without direct evidence (see, e.g., Supreme Court Decisions 2002Do868, Jun. 28, 2002; 2003Do7112, Mar. 26, 2004).

Upon examining the evidence adopted by the court below in light of the records, it can be deemed that Defendant 2, as stated in its reasoning, constitutes a public contest relationship with the above defendant in acquiring convertible bonds by receiving inside information of this case from Co-defendant 1 of the court below, and there is no error of law as otherwise alleged in the ground of appeal.

3. As to the ground of appeal by Defendant’s negligence

The term "purposes of inducing a trade" in Article 188-4 (2) of the Securities and Exchange Act means a trade which is likely to cause an artificial change in the market price due to artificial manipulation, and thus, with the intention of inducing investors to trade securities by misunderstanding that the market price was formed by the principle of natural demand and supply in the securities market, it does not question whether there exists a separate purpose at the same time or any of its main purpose, and the degree of perception of the objective is sufficient to do so. On the other hand, the term "transaction that misleads the purchaser of securities or changes the market price" in subparagraph 1 of the same Article means a trade that is likely to cause an artificial change in the market price and trading volume according to the supply and demand of the securities market, and it does not require a change in the market price due to such act, and where a series of acts are conducted, it is sufficiently possible to determine the market price due to such acts, such as making a change in the market price due to such acts, and it is sufficient that the parties concerned meet the requirement of 200% of the sale and purchase price before and sale.

The court below erred in the misapprehension of legal principles as provided in Article 18-4 of the Securities and Exchange Act, since the defendant's act constitutes a violation of Article 18-4 of the Securities and Exchange Act merely based on the following facts: (a) as shown in the facts and records established by the court below comprehensively taking into account each of the facts and records, such as the total number of non-indicted 1 corporation's shares issued and distributed, (b) the total number of orders issued and sold, (c) a total of 10 million won or more without entering into an actual transaction for four days until the purchase and disposal of the shares of non-indicted 1 corporation; (d) the number of orders issued and sold, (e) a total of 30% or more, (e) a total of 30% of the total number of orders issued and sold, (e) a total of 1,94,306 shares and (e) a total of 1,312,945 shares issued and sold, and (e) a total of 1,000 shares issued and sold,00 won.

4. Conclusion

Therefore, all appeals are dismissed. It is so decided as per Disposition by the assent of all participating Justices.

Justices Yang Sung-tae (Presiding Justice)