[1] The duty of care to be borne by a financial institution when it replies to a bank inquiry inquiry made by an accounting firm which is a third party at the customer's request

[2] Whether the transaction of stocks is deemed a transaction of stocks by reliance on an audit report prepared by an external auditor in a stock transaction and reliance on the audit report prepared by an external auditor (affirmative)

[3] The case holding that a bank has causation between the violation of the duty of care and the occurrence of losses to ordinary investors who purchased stocks and believed the false audit report prepared on the basis of the violation of the duty of care, which was not confirmed by the bank's receipt of bank inquiry report required for

[4] The method of calculating the amount of damages sustained by a stock investor due to a fraudulent audit by an external auditor of a stock company

[1] According to relevant Acts and subordinate statutes, a financial institution is obliged to provide accurate and sufficient credit information to a customer who is an owner of credit information if the customer requests an inquiry of credit information about him/her. Furthermore, in light of the public trust and expertise that the financial institution should have, at the customer’s request, provide accurate and sufficient credit information to prevent the customer from being misled about the fact, as in the case where the financial institution directly provides information to the customer.

[2] One of the most important factors in stock transaction. An audit report prepared through an audit by an external auditor on the financial statements of the company in question revealing accurate financial conditions of the company in question, which has an effect on ordinary investors on the formation of their stock prices. As such, an ordinary investor making stock investment is believed to have duly prepared and publicly announced an audit report indicating the financial status of the company in question, and the share price should have been formed based on his/her belief that the audit report indicating the most appropriate financial status of the company in question was duly prepared and publicly announced, and that the share price would have been formed.

[3] The case holding that a bank has causation between the violation of the duty of care and the occurrence of the damage to ordinary investors who purchased stocks and believed the false audit report prepared on the basis of the violation of the due diligence, which was not verified by the bank's receipt of the bank inquiry report necessary for

[4] It is reasonable to deem that the amount of damages sustained by persons who purchased shares due to an improper audit is equivalent to the share price that has been lost due to such improper audit. Barring any special circumstance, it is equivalent to the difference between the share price normally formed prior to the discovery of the fact of improper audit and the share price normally formed at the time when the fact of improper audit deviates from the closing price, or the price higher than the sale price in cases where the shares were sold at a higher price.

[1] Article 750 of the Civil Code / [2] Article 750 of the Civil Code, Article 197 of the Securities and Exchange Act, Article 17 of the Act on External Audit of Stock Companies / [3] Article 750 of the Civil Code / [4] Articles 393, 750, and 763 of the Civil Code

[2] Supreme Court Decision 96Da41991 delivered on September 12, 1997 (Gong1997Ha, 3078), Supreme Court Decision 2005Da28082 delivered on January 11, 2007 (Gong2007Sang, 270) / [4] Supreme Court Decision 96Da41991 delivered on September 12, 1997 (Gong197Ha, 3078), Supreme Court Decision 97Da26555 delivered on October 222, 199 (Gong199Ha, 2391)

Plaintiff 1 and 2 others (Law Firm Jeongsung, Attorneys Yyoung-si, Counsel for the plaintiff-appellant)

Han Bank Co., Ltd. and one other (Law Firm Spah et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2005Na7544 decided Feb. 17, 2006

The part of the lower judgment against the Defendants is reversed, and that part of the case is remanded to the Seoul High Court.

1. As to the financial institution's duty of care to respond to the bank inquiry statement

According to the relevant laws and regulations, a financial institution is obliged to provide accurate and sufficient credit information to a customer who is an owner of credit information if the customer requests the inquiry of credit information about him/her. Furthermore, in light of the public trust and expertise that the financial institution should have, even if the financial institution replies to the bank inquiry made by an accounting corporation which is a third party at the customer's request, it has the duty of due care to provide accurate and sufficient credit information so as not to mislead the accounting corporation which received the response as well as to provide it

In light of the above legal principles and records, although it is inappropriate for the court below to explain the "matters related to the issuance of bank inquiry notes" in the Financial Supervisory Service's preparation that had not been implemented at the time of the instant bank inquiry, the conclusion that the court below recognized the defendant bank as violating the above duty of care is justified, and there is no error of incomplete deliberation, violation of the rules of evidence, or misapprehension of the legal principles, as alleged in the grounds of appeal.

2. As to the causal relationship between the bad faith of bank inquiry and damage

The bank inquiry statement is intended to be used in the audit report of the auditor from the beginning as a document requesting the accounting firm to verify whether the financial transaction details recorded in the company's account books are the same as actual, and according to the records, the bank inquiry statement of this case states that "the response to inquiry by the auditor is essential for the disclosure of appropriate accounting information through the settlement of sound and transparent accounting practices of our country." Thus, in this case, in light of the original function of the bank inquiry statement of this case and the specific circumstances on the issuance process thereof, the defendant bank of this case was or could have been sufficiently known that (title omitted) the (name omitted) the bank inquiry statement of this case will be used in preparing the audit report of the Rober (hereinafter referred to as "Ba") corporation.

In addition, the financial status of the target company in a stock transaction is one of the most important factors that form the stock price. An audit report prepared after the audit by an outside auditor of the target company's financial statements revealing the accurate financial status of the target company, which has a decisive influence on the formation of the stock price, and is provided and published to ordinary investors, and thus, an ordinary investor who invests in stocks is believed to have duly prepared and publicly announced the audit report indicating the financial status of the target company, and the stock price is to have been formed based on his/her belief that the audit report indicating the most properly prepared and publicly announced, and that the subject company's stocks are to have been traded (see, e.g., Supreme Court Decisions 96Da41991, Sept. 12, 199; 205Da28082, Jan. 11, 2007).

In light of the above legal principles and the records, the court below's determination that the defendants' assertion alone was insufficient to recognize that the plaintiffs had known that there was false entry in the audit report of this case at the time of the plaintiffs' acquisition of the shares of this case. In addition, even though the defendants affected the price manipulation of leer and the non-party representative director's act of violation of trust, etc., as alleged by the defendants, the records show that the price of leer's share price on November 19, 2002, which was the trading day immediately before the publication of the fact of the improper audit of this case, was KRW 1,560 per share, but the above fact that the lower limit was reduced to KRW 670 per share on December 2, 2002 at the end of the publication of the fact of the improper audit was the most direct cause for the publication of the above fact.

Therefore, the court below's conclusion that the defendant bank has a causal relationship between the defendant bank's breach of duty of care and the plaintiffs' loss due to the proper confirmation of the bank inquiry statement, is correct, and there is no violation of the rules of evidence or misapprehension of legal principles as alleged in the

3. As to the conjunctive defense

Pursuant to Article 208(2) of the Civil Procedure Act, if a judgment on the parties' allegations and other means of offence and defense is indicated to the extent that it can be recognized that the reasoning of the written judgment is justified, it is sufficient.

In light of the records, although Liber received “herman’s opinion” in the first half-year audit report in 2002, it can be seen that the reason was not because the fact of the failure to audit was revealed, but because it was impossible to conduct an examination procedure with respect to the shares of BaBa, a corporation subject to the equity interest law among investment securities. Thus, the fact that an annual audit report of the above half-year contents was publicly announced cannot be readily concluded that the Plaintiffs were aware that it was impossible for them to trust matters concerning assets, including the transparency of the accounts of Ba.

Therefore, the defendants' preliminary defense cannot be accepted, and the judgment process leading to the order can be sufficiently known upon examining the reasoning of the judgment below. Thus, even if the above preliminary defense is not clearly determined, the judgment of the court below does not contain any error of omission of judgment as alleged in the grounds of appeal.

4. As to the assessment of damages

As in the instant case, it is reasonable to view that the damages suffered by the Plaintiffs who purchased shares due to a false audit are equivalent to the share price that was lost due to such false audit. Barring any special circumstance, it is equivalent to the difference between the share price normally formed before the fact of false audit was revealed and the share price normally formed at the time when the fact of false audit was revealed and the lower-end price continued to be sold, or the sale at above prices (see, e.g., Supreme Court Decisions 96Da41991, Sept. 12, 1997; 97Da26555, Oct. 22, 199).

In light of the records of the amount of damages calculated by the court below based on these legal principles, this part of the judgment below is erroneous.

First, it is reasonable for the lower court to limit the damage caused by the transaction of stocks acquired by the Plaintiffs during the period from the date when the fraudulent audit report was published to the date before the fact of false audit was revealed. However, according to the records, it can be known that the date when the Plaintiffs recognized that the audit report of this case was published was not March 28, 2002, but April 1, 2002, which was decided by the lower court. Thus, the lower court included the Plaintiffs’ purchase of stocks during the period from March 28, 2002 to March 31, 202, even though it should be excluded from the scope of damage.

Second, in calculating the sales price difference, the court below calculated the number of stocks and disposal stocks by deeming the first acquired stocks to be first disposed of. This method itself is reasonable. However, the court below did not omit the details of stocks sold by Plaintiff 1 from April 3, 2002 to April 15, 2002.

Third, as seen earlier, the value of Baber’s stock was KRW 1,560 per share on November 19, 2002, which was the trading day immediately before the fact of the false audit was published, but the lower limit was recorded on November 29, 2002 at the end of the record, and the last lower limit was finished on November 29, 2002, which was the next transaction day, and the lower limit was finished on December 2, 2002. Thus, the lower court calculated the amount of damages based on KRW 10 per share on April 1, 2003, which was the closing day after the fact of the false audit in this case was revealed.

Therefore, the judgment of the court below is erroneous in calculating the amount of damages as a result of the misunderstanding of the rules of evidence and the legal principles as to the scope of damages caused by the improper audit, which affected the conclusion of the judgment. The ground of appeal pointing this out has merit.

5. Conclusion

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

Justices Kim Ji-hyung (Presiding Justice)