[1] In the case of a bond-type investment trust, the contents of the duty to explain to the customer of the investment solicitor

[2] The case holding that where an employee of an investment trust company actively recommended purchase of beneficiary certificates while emphasizing that it is a specific high-profit product without specifically explaining to the customer the management method of the investment trust property or the investment plan, it constitutes a tort by neglecting the duty of customer protection

[3] Details of the duty of care to be borne by the investment trust company at the operation stage of the investment trust

[4] The case holding that the investment trust company cannot be deemed to have neglected its duty of care as a good manager in the course of managing the trust property in case where the investment trust company concentrated on the investment trust property in the short-term state bond of Russia but caused loss to the investment trust property due to measures such as postponement of payment

[1] When an executive officer or employee of an investment trust company solicits a customer to purchase investment trust goods, he/she has the duty to protect the customer by clearly explaining the characteristics and major contents of the investment trust in question, including the risks associated with the investment, so that the customer may make a reasonable investment decision based on the information. When the customer suffers loss to the customer as a result of the breach of such duty of care, the investor shall be held liable for tort liability. In general, in relation to the risks associated with the investment in bond-type investment trust, the investor shall explain the risks associated with the change in the market price of the bond market, the issuer's credit risks, and the fact that the risks associated with the transfer of foreign bonds to the trust property may result in a change in the market price of the bond market and that there is a possibility of original loss. However, the degree of explanation to the customer shall be determined

[2] The case holding that where an employee of an investment trust company actively recommended the purchase of beneficiary certificates while emphasizing only a specific high-profit product without specifically explaining to the customer the management method of the investment trust property or the investment plan, it constitutes a tort by neglecting the duty of customer protection

[3] Article 17 (1) of the former Securities Investment Trust Business Act (amended by Act No. 5558 of Sep. 16, 1998) provides that a truster company shall be responsible for the management of the trust property as a good manager and protect beneficiaries' interests. Specifically, how to determine the items and rates of investment should be determined by comprehensively taking into account the relevant Acts and subordinate statutes and the terms and conditions of the investment trust, the purpose and method of the operation of the trust property, market situation and outlook at the time, etc. of the trust property, and where the truster instructs the management of the trust property with careful mind that it conforms to the highest interest of the trust property based on collected information to the extent possible, it shall be deemed that the truster has fulfilled its duty of due care as a good manager in the operation of the investment trust. Even if the prediction is made out of the trust property, it shall not be deemed that the company breached its duty of care as a good manager in the operation of the

[4] The case holding that the investment trust company cannot be deemed to have neglected its duty of care as a good manager in the course of managing the trust property in a case where the investment trust company has invested the investment trust property in the short-term state bond of Russia but caused the loss of the investment trust property due to measures such as postponement of payment by Rus

[1] Article 750 of the Civil Code, Article 27(1) of the former Securities Investment Trust Business Act (amended by Act No. 558 of September 16, 1998), Article 13(1) of the former Enforcement Decree of the Securities Investment Trust Business Act (amended by Presidential Decree No. 15757 of April 1, 1998) / [2] Article 750 of the Civil Code, Article 27(1) of the former Securities Investment Trust Business Act (amended by Act No. 5558 of September 16, 1998), Article 13(1) of the former Enforcement Decree of the Securities Investment Trust Business Act (amended by Presidential Decree No. 15757 of April 1, 1998) / [3] Article 17(1) of the former Securities Investment Trust Business Act (amended by Act No. 5558 of September 16, 1998) / [4] Article 15(1)38 of the former Securities Investment Trust Business Act (amended by Act

[1] [2] Supreme Court Decision 2001Da11819 decided Jul. 11, 2003 / [1] Supreme Court Decision 97Da47989 decided Oct. 27, 1998 (198Ha, 2747) Supreme Court Decision 99Da4405 decided Mar. 23, 199 (199Sang, 752)

Plaintiff 1 and seven others (Law Firm Hannuri, Attorneys Kim Sang-won et al., Counsel for the plaintiff-appellant)

Modern Investment Trust Securities Co., Ltd. (Law Firm Chungcheong, Attorney Kim Jong-woo, Counsel for defendant-appellant)

Seoul High Court Decision 2000Na45657 delivered on January 30, 2001

Of the part against the defendant as to damages for delay of the judgment of the court below, the part of the judgment of the court of first instance which exceeds the amount of 5% per annum from January 22, 1999 to May 31, 2003, and the amount exceeding the amount of 20% per annum from the next day to the date of full payment, shall be reversed, and the claim corresponding thereto shall be dismissed. The remaining appeal by the defendant and the appeal by the plaintiffs shall be dismissed. The total costs of the lawsuit shall be two minutes, and the remainder shall be borne by the plaintiffs, respectively.

We examine the grounds of appeal.

1. As to the Defendant’s first ground of appeal

A. When an executive or employee of an investment trust company solicits a customer to purchase investment trust goods, he/she has a duty to protect the customer by clearly explaining the characteristics and major contents of the investment trust in question, including the risks associated with the investment, so that the customer may make a reasonable investment decision based on the information. When the customer suffers loss to the customer as a result of the breach of such duty of care (see, e.g., Supreme Court Decisions 97Da47989, Oct. 27, 1998; 99Da4405, Mar. 23, 1999). In general, in the case of a bond-type investment trust, the investment solicitor shall explain the risks associated with the investment in the bond market, the issuer’s credit risk, and the possibility of loss to the principal when it incorporates a foreign bond into a trust property, but the extent of explanation to the customer shall be determined by comprehensively taking into account the characteristics of the goods subject to the investment and risk level, experience and ability of the customer.

B. Comprehensively taking into account the evidence adopted by the lower court: (a) Defendant 2 was able to create and operate an investment trust agreement with the 0% of the total annual rate of return on domestic corporate bonds at the time of investment; (b) Defendant 3-4% of the investment trust proceeds at the time of investment; (c) Defendant 2 was able to subscribe to the said investment trust agreement with the Korea Exchange Bank; (d) was 5% of the investment trust proceeds at the time of investment; (e) the remaining amount of investment trust proceeds at the time of investment trust assets at the time of investment; and (e) was 1% of the investment trust proceeds at the time of investment; (e) the remaining amount of investment trust proceeds at the time of investment trust assets at the time of investment trust; and (e) was 5% of the investment trust proceeds at the time of investment trust assets at the time of investment trust; and (e) the Plaintiff was able to subscribe to the instant trust assets at the time of investment trust assets at the time of investment risk; and (e) was emphasized by the employees of the instant investment trust proceeds.

In light of the records, we affirm the fact-finding of the court below as it is and there is no violation of law of mistake due to violation of the rules of evidence.

C. As above, the main reason why the Defendant Company could present a high rate of return on the investment trust of this case is that Russia short-term state bonds are higher than national bonds of other new interest industry countries at that time, and this means that Russia short-term state bonds have been evaluated higher risk of national credit considering Russia’s political and social anxiety in financial markets. Thus, even though considering the fact that there is a large risk of price fluctuations in the bond market and the risk of national credit, and the risk of exchange rate fluctuations can be removed by gift exchange contract, if Russia’s financial market changes occur, it would have no choice but to be affected by the credit risk to be returned to the domestic bank of Russia, among the parties to the gift exchange contract. Accordingly, it would be clear that the Defendant Company’s solicitation to make investments in the investment trust of this case with the same customer without experience in investing in the foreign bond-type investment trust products, and it would not be necessary to clearly explain the above risk of claim market, the risk of national credit and exchange rate risks, and it would not be necessary to inform the Plaintiffs’ reasonable investment investment trust of the investment trust of this case.

The court below's finding the defendant company liable for damages against the plaintiffs is correct and there is no error in the misapprehension of legal principles as alleged in the grounds of appeal.

2. The defendant's ground of appeal No. 2 and the plaintiffs' ground of appeal No. 2

A. Article 17(1) of the former Securities Investment Trust Business Act (amended by Act No. 558 of Sep. 16, 1998; hereinafter the same) provides that a truster company shall be responsible to manage the trust property as a good manager and protect beneficiaries' interests. Specifically, how to determine the type of investment and ratio should be determined by comprehensively taking into account the relevant Acts and subordinate statutes and the terms and conditions of the investment trust, the purpose and method of the management of the trust property, and the market situation and prospects at the time. However, if the truster company instructs the management of the trust property with careful mind that it conforms to the highest interest of the trust property based on collected information to the extent possible, it shall be deemed that it has fulfilled its duty of care as a good manager in the course of operating the investment trust. Even if the prediction is made out of the trust property, it shall not be deemed that it has breached its duty of care as a good manager in the course of operating the investment trust.

Meanwhile, Article 21 (1) 1 of the terms and conditions of the instant investment trust provides that the truster company shall not instruct the trustee company to make an investment in the same item in the same securities in excess of 10/100 of each trust property. This reflects the contents of Article 33 (1) 1 of the former Securities Investment Trust Business Act, which was in force at the time, and the same issue as referred to in the above provision refers to the securities issued by the same issuer at one opportunity.

B. In light of the record, the Defendant Company decided to invest and manage the trust property of the instant investment trust in Russia short-term state bonds from the beginning, and calculated the expected return rate, and actually concentrated on Russia short-term state bonds. However, the object of the investment is not limited to Russia government bonds of the same issue, but it can be known that the investment amount in one issue is divided into several types of Russia government bonds issued over several times. It does not appear to exceed 10/100 of the trust property of this case. Meanwhile, until June 198, the Defendant Company did not take measures such as suspending payment of foreign currency claims until Russia long-term government bonds, and it is difficult to determine that Russia bank violated the above provision of the Securities Investment Trust Business Act’s duty of care and thus, it is difficult to conclude that the above change in the terms and conditions of the investment trust property was made by Rusia long-term investment company’s breach of its duty of care.

C. Nevertheless, the lower court’s determination that Defendant Company was negligent in failing to perform its duty of due care as a good manager in the course of managing the investment trust property of this case is erroneous. However, insofar as it is acknowledged that Defendant Company is liable for tort damages due to the violation of the duty of customer protection at the investment recommendation stage, the lower court’s error does not affect the conclusion of the judgment. Ultimately, the allegation in the grounds of appeal on this point is unacceptable.

3. As to the defendant's grounds of appeal Nos. 5 and 6

In soliciting the plaintiffs to make an investment in the investment trust of this case, if the defendant company fulfilled its duty of care to protect the customers by properly explaining the management method of the investment trust of this case or the target and risk of the investment trust of this case, the plaintiffs would not be responsible for any losses not to recover the investment amount due to the failure to make an investment in the investment trust of this case. Accordingly, the defendant company neglected such duty of care as above and thereby deducted the opportunity for choice that could not make an investment in the investment trust of this case, and thereby the plaintiffs suffered losses not to recover the investment amount. Thus, the defendant company's violation of the above duty of care and the losses caused to the plaintiffs. Thus, there is a proximate causal relation between the defendant company's losses, and the defendant company's liability for damages is responsible for compensating the plaintiffs. Since the defendant company's liability for damages is not directly caused by the measures such as the postponement of payment of Russia, and therefore the legal nature and effect of the measures such

The judgment of the court below to the same purport is just, and there is no error of mistake or misunderstanding of legal principles as alleged in the grounds of appeal.

4. As to the Defendant’s third ground of appeal

According to the reasoning of the judgment below, the court below confirmed that, if there was no tort in this case, the Plaintiffs would have invested in the financial instruments guaranteeing the interest rate of time deposit in light of the existing financing method or the nature of the purchase price of the beneficiary certificates of this case, and it was reasonable to deem that the Plaintiffs could have known such circumstances as well as the employees of the Defendant Company. Thus, the court below determined that, from the sum of the purchase principal of the beneficiary certificates of this case and the amount equivalent to the interest accrued from the purchase date of the beneficiary certificates of this case until the maturity date of the investment trust of this case requesting the redemption of the beneficiary

In light of the records, the above judgment of the court below is just and acceptable, and contrary to the allegations in the grounds of appeal, there is no error of law such as misunderstanding of legal principles or misunderstanding of facts as to the scope of damages

5. The defendant's ground of appeal Nos. 4 and the plaintiffs' ground of appeal No. 1

Considering the circumstances leading to the creation and operation of the instant investment trust product, the details and degree of violation of the duty of care in the process of soliciting customers, motive and process of the Plaintiffs’ response to the solicitation, the Plaintiffs’ investment experience, the details and reasonableness of the measures taken by the Defendant Company regarding the management of trust property, the Defendant Company’s failure to recover the investment amount, and other various circumstances indicated in the records, the lower court’s decision that deemed the Defendant Company as a good manager cannot be deemed to have violated the duty of care as a good manager in the course of managing the instant trust property, is just and acceptable, in view of the fact that the Defendant Company’s breach of the duty of care in the course of managing the instant trust property and the reasons why the Defendant Company did not collect the investment amount. However, the lower court’s decision that deemed the amount of negligence

The Supreme Court's decision that the plaintiffs pay taxes is not appropriate to invoke this case.

The ground of appeal on this part is without merit.

6. Determination on damages for delay

ex officio, the portion of "interest rate prescribed by Presidential Decree" in the main sentence of Article 3 (1) of the Act on Special Cases concerning Expedition, etc. of Legal Proceedings before the amendment (amended by Act No. 6868 of May 10, 2003) was decided as unconstitutional on April 24, 2003. Accordingly, the amended provision of the above Act and the main sentence of Article 3 (1) of the Act on Special Cases concerning Expedition, etc. of Legal Proceedings (amended by Presidential Decree No. 17981 of May 29, 2003) provide that the statutory interest rate applicable to cases pending before the court at the time of the enforcement of the above Act shall be 20% per annum. Thus, the court below's order to pay damages for delay at the rate of 5% per annum, which is civil interest rate until May 31, 2003, which is the date of enforcement of the above amended Act, shall be applied to the above order to pay damages for delay at the rate of 1.25% per annum.

7. Conclusion

Therefore, from January 22, 199 to May 31, 2003, the part against the defendant as to damages for delay in the judgment of the court below is reversed by exceeding five percent per annum under the Civil Act and twenty percent per annum under the Act on Special Cases concerning the Promotion, etc. of Legal Proceedings from the next day to the date of full payment. This part is sufficient to be directly decided by the court, and it is so decided that it is proper for this court. Accordingly, the judgment of the court of first instance corresponding to the above part is revoked, and the plaintiffs' claim corresponding to the above part is dismissed. The remaining appeal by the defendant and the plaintiffs' appeal are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Cho Cho-Un (Presiding Justice)