Plaintiff

Defendant 1 and two others (Law Firm Sejong, Attorneys Kim Hyun-jin et al., Counsel for the defendant-appellant)

August 27, 2010

Seoul Western District Court Decision 2009Kahap1535 Decided November 5, 2009

1. Of the judgment of the court of first instance, the part against the Defendants in excess of the amount ordered to be paid under the above order shall be revoked and the Plaintiff’s claim corresponding to the revocation

The Defendants jointly and severally pay to the Plaintiff 59,872,240 won with 5% interest per annum from March 9, 2009 to September 17, 2010, and 20% interest per annum from the next day to the day of full payment.

2. The plaintiff's appeal and the defendants' remaining appeal are dismissed, respectively.

3. Of the total litigation costs, 60% is borne by the Plaintiff, and the remainder is borne by the Defendants, respectively.

1. Purport of claim

The defendants jointly and severally pay to the plaintiff 160,747,00 won with 5% interest per annum from the day after the copy of the complaint of this case is served to the day when the judgment of this case is rendered, and 20% interest per annum from the next day to the day of full payment.

2. Purport of appeal

A. The part of the judgment of the court of first instance against the plaintiff falling under the part of the order to pay is revoked. The defendants jointly and severally pay to the plaintiff 25,136,120 won and 5% per annum from March 9, 2009 to November 5, 2009, and 20% per annum from the next day to the day of full payment.

B. The Defendants: The part against the Defendants in the judgment of the first instance is revoked, and the Plaintiff’s claim as to the revocation portion is dismissed.

1. Quotation of judgment of the first instance;

(1)The reasons for the court's explanation concerning this case are as follows: "No. 3 (Attachment 6) out of the first instance judgment (No. 22) shall have been used and No. 11 to 7 shall have been examined and "No. 14 (including paper numbers)" and, in accordance with the whole purport of the arguments and records No. 14 (including paper numbers) in the first instance judgment, they shall have known that, even if they are entered in the return of tax base and amount of tax for the fiscal year 2005 and 206, their capital erosion rate has reached 95.1% and 96.3%," "No. 33 and 34 shall have been used in the first instance judgment and, if the recoverable value presumed to be recoverable from securities is smaller than its acquisition cost, it shall have taken into account that "No. 10 or 4 shall have increased the total value of the securities issuer's capital loss" and thus, the defendants shall be deemed to have increased its 14th anniversary of the first instance judgment.

2. Matters to be modified;

3. Scope of damages

A. Scope of stock transactions with causations;

(1) Scope of transaction of stocks acquired

As seen earlier, the time when the 31st business report of the Kenya was published is March 31, 2007. The time when the Securities and Futures Commission widely announced false entries in the business report of this case is limited to the stock transaction that the Kenya acquired between March 31, 2007 and February 20, 2008, on the ground that the Kenya published the financial statements in violation of the accounting standards, and the Securities and Futures Commission took corrective measures, etc. against the Kenya on February 21, 2008 (The Financial Supervisory Service distributed the above report data on February 20, 2008, which can be reported from the following day when it distributed the report data on February 20, 2008). The purchaser of the Kenya stocks after the media report of this case was aware that the contents of the 31st business report of this case were false. Thus, the Plaintiff’s damage is limited to the share transaction that the Plaintiff purchased between March 31, 2007 and February 20, 2008.

(2) Scope of transaction of disposed stocks

If the Plaintiff sells shares before the above press report, the transaction was conducted on the basis of the share price formed prior to the fall of the share price due to a false statement in the business report of this case being published to the general public. Thus, the damages incurred by the Plaintiff are deemed to have no causal link with the false statement in the business report of this case. Therefore, in calculating the amount of damages, it is reasonable to determine the amount of damages arising from the stock transaction disposed of after February 21, 2008,

(3) Specific scope of transaction

In specifying stock transactions with which the causal relationship is recognized, the first class, first class, which is deemed to first dispose of the stocks acquired out of the owned stocks, will be applied.

According to the statement in Gap evidence No. 3, 600, purchased by the plaintiff on February 26, 2008, 60,000 shares was changed to 6,00 shares after capital reduction (the effective as of April 23, 2008). This is the most severe purchase, and it is the last sale. Since there is no causal relationship with the false disclosure of this case, it is a transaction with no causal relationship, it is deemed that only 4,000 shares sold at 865 won per share on July 25, 2008, which is the last sale transaction of the plaintiff's 10,000 shares, excluding 6,00 shares out of 10,00 shares among 10,00 shares, which are acquired between March 31, 2007 and February 20, 2008. In light of this, if the plaintiff disposed of the scope of shares after February 21, 2008, the list of shares is specified in the first sale.

B. Calculation of damages

(1) Scope of damages

Article 15 (1) of the former Securities and Exchange Act provides that "if the claimant disposes of the securities at the market price at the time of the closing of argument or at the time of the closing of argument, the amount after deducting the disposal price from the actual amount paid by the claimant in acquiring the securities shall be the amount of compensation."

However, in general, in a case where the normal share price is formed as a result of the occurrence of a false disclosure after the fact of the false disclosure has been revealed, the price fluctuation after the normal share price formation date does not have any causal relationship with the false disclosure, barring any special circumstances. Thus, in a case where the sale of the pertinent shares after the normal share price formation date or the holding of the pertinent shares continued until the closing date of oral argument is confirmed, as to the difference between the above normal share price and the actual disposal price (or the market price at the closing date of oral argument) out of the amount of damages under Article 15(1) of the Act, the absence of causal relationship under Article 15(2) of the Act shall be deemed to exist. In this case, the amount of damages shall be the amount calculated by deducting the share price on the date of formation of the above normal share price from the purchase price (see Supreme Court Decision 2006Da16758, 16765, Oct. 25, 2007).

However, as seen in light of the purport of Gap evidence No. 9 and the entire pleadings, the share price per share of the KF shall maintain between KRW 430 and KRW 455 won from February 19, 2008 to February 19, 2008, and reduced to KRW 390 on February 20, 2008, which was announced publicly. The Securities and Futures Commission’s investigation and supervision by the Securities and Futures Commission, which was known to the general public through press reports, brought down to KRW 335 on February 21, 2008. The share price of the KF at KRW 240 from February 26, 2008 to February 28, 2008, was reduced to KRW 250 on the stock price, and it is reasonable to deem that the Plaintiff disposed of the amount of damages from the purchase price after February 26, 2008, in light of the increase of the share price at KRW 250 on February 29, 2008.

(2) Determination of damages

Ultimately, 40,680,600 purchase price of the total of 400,000 purchase price of 245,680,600 (=98,142,600 + 147,538,000 won after the reduction of capital + 400,000 won (=40,000 won after the reduction of capital x 240 won) calculated by deducting the above normal share price of 240 won (=40,000 won x 400 won), which is the amount of 149,680,600 won (i.e., 245,680,600 won - 96,000,000 won) which is the trade scope recognized as a causal relationship, such as the attached specification of transactions, shall be the Plaintiff’s damages caused by the fraudulent disclosure of this case.

C. Limitation on liability

In a lawsuit seeking compensation for damages governed by Article 15 of the former Securities and Exchange Act, there is no difference in the application of the basic ideology of the Damage Compensation Act, i.e., fair burden of damages, and thus, it is still possible to set off a comparative negligence or limit liability based on the equitable principle, on the ground that the victim has been negligent in causing and expanding damage. In particular, considering the fact that it is extremely difficult to estimate when and to what extent a specific factor has influenced since the change in stock price is very diverse and multiple factors simultaneously, it is extremely difficult to estimate when and to what extent a specific factor has influence, other than the illegal acts such as false public disclosure, etc., it may be deemed that it is extremely difficult to prove the occurrence of damage due to such other circumstances in light of the ideology of the damage compensation system, i.e., fair apportionment of damage (see Supreme Court Decision 2006Da167568, Oct. 25, 207).

With respect to the instant case, the Health Center and the Kenya recorded accounting losses from 2005. In addition to the false publication of this case, the Plaintiff appears to have affected the occurrence of damages, such as reduction decision implemented by the Kenya Telecom or the overall changes in the situation of the stock market, etc. for the period of time until the Plaintiff suffered losses after purchasing the shares of the Kenya, and the false publication of this case was not made through the means of appropriating processed assets or manipulating evidential documents, etc., and the false publication of this case was not made through the means of appropriating the processed assets or manipulating evidentiary documents, etc. In full view of all the circumstances revealed in the instant pleadings, such as the size of assets and capital which were unrefilledd due to the fraudulent publication of this case, it is reasonable to limit the Defendants’ liability to 40

Therefore, the Defendants are jointly and severally liable to pay to the Plaintiff 59,872,240 won (i.e., KRW 149,680,600 x 0.4) and damages for delay at each rate of 20% per annum under the Civil Act from March 9, 2009, which is the day following the delivery of a copy of the complaint of this case, until September 17, 2010, the date when the judgment of the court is rendered by the Defendants, and from the next day until the day when the full payment is made.

3. Conclusion

Therefore, the plaintiff's claim of this case is partially accepted within the scope of the above recognition, and since the part against the defendants in excess of the above payment order in the judgment of the court of first instance is unfair in conclusion, the plaintiff's claim corresponding to the revoked part is dismissed, and the remaining part is justified in conclusion. Thus, the plaintiff's appeal of this case and the defendants' remaining appeal are dismissed as it is without merit.

[Attachment]

Judges Jo Nam-dae (Presiding Judge)