Plaintiff 1 and one other (Law Firm LLC, Attorneys Jin-chul et al., Counsel for the plaintiff-appellant)

Financial Services Commission

December 7, 2012

1. On February 9, 2012, the Defendant’s suspension of duties against Plaintiff 1 on February 9, 2012, one year of disciplinary action, and six months of suspension of duties against Plaintiff 2 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On June 25, 2010, the Ansan Accounting Corporation changed the trade name from the Securities and Futures Commission (hereinafter “Securities Board”) to “ASB Holdings” on February 24, 2009, and again changed the trade name as of June 24, 2010, but was designated as an auditor of AS (hereinafter “AS”). From February 14, 2011 to December 17, 201, Plaintiff 1 was a certified public accountant who is the director in charge, Plaintiff 2 as a general certified public accountant, and Plaintiff 2 as an auditor of ASS’s financial statements (hereinafter “instant audit”).

B. On December 21, 201, the Securities Board did not have concluded a conditional transfer certificate (hereinafter “Edow”) with a law firm, but falsely appropriated the amount of KRW 1 billion on the financial statements from 2009 to the end of the fiscal year 2011 as advance payment as if there was an amount of KRW 1 billion on the financial statements. While conducting the instant audit, the Plaintiffs did not affix a seal impression on the Axro contract, and paid the fees to Nonparty 1 (hereinafter “Axin1”) of the law firm affairs, which is the storage of Axinro contract, for a certain period of time to verify the validity or effectiveness of the contract, and instead did not take any measures for the Plaintiff’s duty of disclosure and audit for the Plaintiff 16 months based on the Rules on External Audit (hereinafter “Act No. 15”) on External Audit and Inspection for the Plaintiff 16 months based on the said Rules.

C. On January 30, 2012, the Certified Public Accountants Disciplinary Committee requested the Defendant to make a resolution on a disciplinary action against the Plaintiffs, and on January 30, 2012, decided to take one year of suspension of duties for Plaintiff 1, and six months of suspension of duties for Plaintiff 2. Accordingly, on February 9, 201, the Defendant issued a disciplinary action to suspend Plaintiff 1’s certified public accountant’s duties for one year, six months of suspension, and six months of duties for Plaintiff 2’s certified public accountant (hereinafter collectively “instant disposition”).

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 2, 13, 18, Eul evidence 9, 17, 20, Eul evidence 13-1, and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiffs' assertion

(1) Non-existence of grounds for disposition

In light of the following, the plaintiffs cannot be deemed to have significantly fulfilled their duty of care to confirm the validity or existence of the contract with Escro while conducting the audit of this case. Thus, the disposition of this case does not exist any grounds therefor.

(A) Upon entering into an agreement with the non-party 1 and the non-party 6 to transfer KRW 1 billion to the custodian’s account designated in the agreement as to the custody and management of the deposit amount to take over the shares of ENC Co., Ltd. (hereinafter “ENC”), Swiftships agreed to transfer KRW 42,749 shares of ENC to the down payment for the stock acquisition contract, upon entering into the agreement with the non-party 5 and the non-party 6 to transfer KRW 42,749 shares from ENC to EN’s account. Accordingly, the down payment of KRW 1 billion deposited into the custodian’s account was delivered to the non-party 5 who is the party to the stock acquisition contract. Accordingly, since EN agreement remains valid and accordingly, there is no problem in the instant audit.

(B) Even if the amount of KRW 1 billion paid under a domestic contract and the advance payment made thereunder is false, the original accounting firm in charge of audit for the fiscal year 2009 of A.I.D. also deemed to have actually existed the advance payment of KRW 1 billion under the E.I.D. In order to verify the actual existence of the advance payment of KRW 1 billion, the Plaintiffs did not find out that there was any gross omission in the contract or the advance payment of KRW 1 billion under the name of E.I.D. in order to verify the existence of the advance payment of KRW 1 billion. The Plaintiffs did not find that there was any apparent omission in the contract or any other objective evidence that Nonparty 5 received the down payment of KRW 1 billion under the contract, including a document verifying the content that Nonparty 5 received the down payment of KRW 1 billion under the contract, and that there was no apparent omission in the audit or inspection of the advance payment of KRW 1 billion in the name of E.I.D.

(2) Defect in exercising discretionary power

In light of all the circumstances, including the Defendant’s internal rules of “Rules of Enforcement of the Regulations on External Audit and Accounting, etc.,” that did not prevent any error falling under gross negligence as prescribed by the criteria for the determination of the amount of discretion, even if there were gross negligence or gross negligence with respect to the accounting of advance payment of KRW 1 billion, such illegal accounting cannot be easily found unless the audit was made. In light of the fact that the Plaintiffs did not audit the ice for the period during which the illegal accounting occurred, and other circumstances such as the cause, result, method, etc. of illegal accounting, the instant disposition applying a more harsh standard than the criteria applied to Switzerland, even though the Plaintiffs fall under the grounds for mitigation of basic measures in light of the above determination criteria, is deemed to have exceeded the scope of discretion or abused discretionary authority.

(b) Relevant statutes and public notice;

Attached Form is as shown in the attached Form.

C. Facts of recognition

(1) On September 17, 2009, Nonparty 2, Nonparty 7, and Nonparty 8 (hereinafter “Nonindicted 2, etc.”) concluded an understanding note on the acquisition of shares and management rights in the name of Arabic with Nonparty 5, a representative director, when negotiating the acquisition of shares and management rights of Alice with Nonparty 5, a shareholder of Alice’s major shareholder Nonparty 9 and ENC’s representative director, who owns 45% of ENC shares, and ENC’s acquisition of shares and management rights.

(2) Around October 2009, Swiftships published that it would be expected to acquire the entire 9 billion won of algos stocks, and that it would enter into a contract for acquisition of algos 49.99% of algos issued on or around January 13, 2010 of the following month after having inspected algos algos around November 25 of the same year.

(3) On December 14, 2009, A.S. entered into a share acquisition agreement, around 11.3 billion won, with Non-party 2 and Non-party 8, to acquire the shares and the management right of Non-party 9 and A.S. 2 billion won (a contract amounting to KRW 1. billion, intermediate payment to KRW 13.5 billion, and balance KRW 2 billion) as of the 15th day of the same month. Non-party 5 demanded that A.S. enter into a share acquisition agreement of E.S. C. 3 (hereinafter “instant transfer agreement”). Since Non-party 5 participated in A.S.’s transfer agreement, A.S. management’s major shareholders and executive officers entered into the instant contract after changing A.S. officers, and the non-party 5 did not refuse to enter into the instant contract, which was the down payment to Non-party 8’s management.

(4) Accordingly, Nonparty 7, who was the lead of Nonparty 8, proposed that Nonparty 1, who was aware of it around December 18, 2009, enter into the instant acquisition agreement, enter into an agreement under its name and receive commission fees. Nonparty 1 entered into a deposit account with Nonparty 4’s post office ○○○ and the transfer account with Nonparty 5’s National Agricultural Cooperative. Nonparty 1 was the custodian of Nonparty 1, and the storage period of Nonparty 3 days or less, paid 50,000 won to Nonparty 1, who was paid 30,000 won interest to Nonparty 1, an agent of Nonparty 8, who was the management manager, and then requested Nonparty 1 to change Nonparty 8’s name and affix his seal to Nonparty 8, who was the manager of Nonparty 1’s latest contract. Nonparty 1, who was the manager of Nonparty 8, requested Nonparty 1 to change his seal imprint from Nonparty 1, who was the 300,000 won of the contract.

(5) On the other hand, Nonparty 9, etc., entered into and implement the contract directly with the attorney at the ○○○ branch office of Nonparty 4, a designated deposit account under the contract, but Nonparty 8 was urged to enter into the contract, by facsimileed the contract with the seal affixed by the custodian at the wind that Nonparty 8 demanded to enter into the contract, and entered into the contract by facsimile again with the seal affixed on the stamp’s corporate seal affixed thereon. On December 18, 2009, Nonparty 11 transferred KRW 1 billion to the Sck’s account at the ○○ branch office of Nonparty 4, a designated account under the contract.

(6) On January 5, 2010, Nonparty 8 renounced the contractual right, and Nonparty 2 solely assumed the transferee. On January 11, 2010, Nonparty 2, etc. loaned KRW 8 billion from a bondholder who was named on January 11, 2010 to Nonparty 9 as part of the purchase price of shares, and paid it to Nonparty 8 as part of the purchase price of shares. On the 12th day of the same month, Nonparty 8 received a deposit amount of KRW 8.9 billion from Nonparty 12, who was the representative director of the Arabic, and received a check in full, and paid KRW 8.7 billion among them to the above bondholder.

(7) On January 13, 2010, Nonparty 2 entered into a share acquisition agreement to acquire 42,749 shares of registered ordinary shares issued by E.C. from Nonparty 5 and E. 6 holding 35% of E.C. shares, and determined to pay the deposit amount of KRW 1 billion out of the total acquisition amount of KRW 6 billion at the same time as the contract was entered into, and the performance bond kept by Nonparty 1 in cash was paid to Nonparty 5 and Nonparty 6, and received the passbook and seal of each national bank account opened in the name of Nonparty 5 and Nonparty 6. On the same day, Nonparty 2 transferred 1.1 billion won to the national bank account in the name of Nonparty 5, and 4.6 billion won to the national bank account in the name of Nonparty 2. Nonparty 2 paid the deposit amount of KRW 5.5 billion to E.C. 5.5 billion to E. 5.7 billion to E.C. 5.5 billion.

(8) Subsequent to Nonparty 5, Nonparty 9, Nonparty 12, and Nonparty 2, etc. prepared a letter of confirmation stating that “I did not receive KRW 1 billion stored under the Sck contract,” at the request of Scs, a post office bank passbook was opened and received KRW 1 billion from Nonparty 4 on December 22, 2009, and then returned to Nonparty 4 on a check, and then delivered the check again to Nonparty 4.” Accordingly, there was a dispute over the place of use of KRW 1 billion among the persons on the spot.

(9) On January 2010, Nonparty 5 announced that the certified public accountant belonging to Han Young-gu Accounting Corporation, a person in charge of the actual inspection, paid the down payment and intermediate payment to Nonparty 13, but did not actually receive it, and transferred the passbook and seal of the post office bank opened in the name of Nonparty 5 and Nonparty 6, and then asked Nonparty 13 upon Nonparty 13’s recommendation, Nonparty 5 sent a letter-proof mail proving that there was no performance, such as: (a) preparing the instant transfer contract; and (b) failing to receive the down payment and intermediate payment from Aars after preparing the instant transfer contract; and (c) from March 12 to July 30 of the same year, Nonparty 16 sent a letter-proof mail proving that “the instant transfer contract will be cancelled since only the down payment and intermediate payment were not paid.”

(10) On the other hand, around January 22, 2010, KRW 1100 million was deposited in the Aman’s account as the depositee is unknown. Nonparty 11 prepared a separate business report from Nonparty 14, the former official in charge of the Aman’s accounting, and Nonparty 15, the former representative director of the Aman’s office, was returned to Sk, and the KRW 100 million was the loan, and later, he would give documentary evidence. However, Nonparty 11 may be presumed to have received Sk’s deposit because there is no other details of transactions that can be deposited in Aman’s name, so the said money may be presumed to have been returned. However, although Sk’s deposit differs from the amount of the contract, and the depositor cannot be deemed to have received the advance payment return. Thus, Nonparty 11 prepared a separate business report of KRW 43,100,000,000 from the advance payment account, and prepared a business report of Nonparty 15, the former representative director of the A.

(11) Afterwards, all managers, including Nonparty 9, filed a petition with the Seoul Central District Prosecutor’s Office for the embezzlement of KRW 5.7 billion for the acquisition price of alcen shares, while managing the accounts of Nonparty 5 and Nonparty 6, and accordingly, the investigation into Nonparty 2 was initiated. As a result of the investigation, Nonparty 2 confirmed that Nonparty 2 embezzled 8.7 billion won of alcen’s funds, etc., and Nonparty 2 was indicted for violating the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement). Nonparty 2 was guilty of embezzlement of KRW 8.7 billion in both the Seoul Central District Court (2010Da271, 867, 972, 972, which is the legal ground of the first instance trial) and the second instance court (2010No3263) and the Supreme Court (2011Do4742).

(12) At the time of the instant audit, Nonparty 3: (a) filed a suit against the Plaintiff on February 15, 201, on the fact that KRW 1 billion was transferred to a third party’s account, not a custodian; and (b) the written contract was merely sent by facsimile; (c) Nonparty 1 confirmed that Nonparty 1 was a telephone with respect to the instant transfer agreement and the instant contract. However, Nonparty 1 did not receive continuous phone; (d) confirmed the financial data deposited to the Plaintiff and Nonparty 4; and (e) subsequently, Nonparty 1,10 million won deposited to the Plaintiff’s account was related to the deposit amount of the instant contract, and Nonparty 1’s written statement on February 15, 2011, Nonparty 1, Nonparty 2, etc. did not receive KRW 17.8 billion from the Plaintiff’s advance payment of KRW 1,000,000,0000,000,0000,000,000,000 from Nonparty 1,00.

(13) On April 7, 2011, when the investigation of Nonparty 2’s embezzlement, etc. was conducted, the Financial Supervisory Service held that, upon supervision over the audit report for the fiscal year 2010 by Ssys on April 7, 2011, Sys acquired 49.9% of Esys stocks from Nonparty 5 and Nonparty 6 in order to conceal Nonparty 2’s embezzlement of KRW 8.7 billion and paid intermediate payment amounting to KRW 5.7 billion.7 billion as if the Esys and Nonparty 1 entered into the contract on December 18, 2009, the Financial Supervisory Service managed the accounts as if the Esys and Nonparty 1 were to use the said money as the down payment for the instant transfer contract, and then transferred the said money to Nonparty 7’s account in the name of Nonparty 4 employee Nonparty 7’s loan manager as if it was an advance payment for the instant contract.

(14) On December 21, 201, the Korea Securities Commission made an investigation and supervision of the financial statements from 2009 to 201 by Switzerland’s first half of 201, and made an advance payment of KRW 1 billion with Nonparty 1 without entering into an Esc with Nonparty 1, and made a false entry into a false statement in accordance with Article 16(2) of the External Audit Act, Article 449 of the Financial Investment Services and Capital Markets Act (hereinafter “Capital Markets Act”), Article 55 of the External Audit Regulations, and Article 55 of the External Audit Regulations (hereinafter “Capital Markets Act”), to impose an administrative fine of KRW 37.5 million on Switzerland, to recommend the Ass representative director to dismiss the As representative director, and at the same time, to request the prosecution to investigate the former and present representative director of Ass representative director.

(15) On January 30, 2012, the Seoul Central District Prosecutors' Office published the annual business report of 43, 44, and 45 half-yearly reports, and concluded the agreement with Nonparty 15 on the charge of violation of the Capital Markets Act by falsely appropriating the amount of KRW 1 billion as if it entered into the contract in advance, and then appropriating the suspected criminal facts as if it had been entered into the contract, there is a valid ecc contract in appearance, the ec deposit amount of KRW 1 billion in the contract was remitted to Ec to the designated account under the contract, and the plaintiffs also have no problem in accounting settlement. In light of the fact that Nonparty 15 knew that the contract was not actually established in ec, it cannot be deemed that Nonparty 15 had any criminal intent in the window dressing accounting, or that Nonparty 15 had any criminal intent in the window dressing accounting. In light of the fact that there is no problem, the proof was concluded.

[Reasons for Recognition] Facts without dispute, the evidence mentioned above, Gap evidence Nos. 4, 5, 11, 12, Eul evidence No. 2-1, Eul evidence No. 6, 24, Eul evidence No. 13-2, 4, Eul evidence No. 19-1, and Eul No. 19-2, and the purport of the whole pleadings

D. Determination

(1) As to the non-existence of grounds for disposition

(A) According to the above facts, the Seoul Central District Court, which held that, unlike the defendant's assertion, did not determine the validity or existence of the Scro contract between Algo and EgoNC, sent the Scro contract signed by Algo and EgoN to Ego, and the non-party 1's expression of intent was entered into with Egos and the non-party 1 by receiving it. Accordingly, since Scro contract was paid in KRW 1 billion to Ecro contract, the advance payment of KRW 1 billion under the Scro contract against Ecro was valid (the Seoul Central District Court, which was the first instance court of the case, such as delivery of shares between Algos and Egos, did not determine the validity or existence of the Scro contract between Als and EgoN and the non-party 1. The non-party 2 did not have any gross error or omission that the plaintiffs paid to the non-party 5.65 billion won on May 6, 2015).

(B) Even if the above facts were revealed that the contract was not valid, the plaintiffs confirmed Sk-ro contract with the seal affixed only by facsimile at the time of the audit. However, if they were sent to the non-party 1 with the seal affixed to Sk-ro contract, it would be valid if they were sent to the non-party 1, and in fact, the non-party 1 entered into the contract with Sk-ro with the seal affixed to Sk-ro corporation, and the non-party 1 was in possession of the contract. The non-party 4 account transferred to Sk-ro was not indicated as the custodian's account but as Sk-ro bank account, it could not be viewed that the plaintiffs were not directly related to the execution of the contract or the validity of the contract, and it would be difficult to view that the non-party 1, the custodian of Sk-ro bank did not request the plaintiffs to pay the advance payment of KRW 1 billion in consideration of the fact that the plaintiffs did not have any other means of contact with Sk-ro bank's corporate accounting as at the time of the audit.

(2) Sub-determination

Since the reason for the instant disposition does not exist in one mother, this part of the plaintiffs' assertion is with merit. Therefore, without the need to further determine the remaining arguments of the plaintiffs, the instant disposition is unlawful and should be revoked.

3. Conclusion

The plaintiffs' claims are accepted and the costs of lawsuit are assessed against the losing defendant.

[Attachment]

Judges 16 16 16 16