[1] Whether a dealer under the former Indirect Investment Asset Management Business Act may be deemed to have fulfilled its duty to protect investors solely on the ground that it believed that the content of sales auxiliary materials provided by an asset management company is accurate and sufficient while soliciting investors to acquire beneficiary certificates, and provided an explanation on investment trust based on such belief (negative)

[2] Whether an asset management company under the former Indirect Investment Asset Management Business Act may be deemed to have fulfilled its duty to protect investors on the sole basis of the fact that the asset management company provided sales auxiliary materials, etc., including indications that may mislead the company about important matters, other than the investment prospectus, to the sales company and investors, and that the sales auxiliary materials, etc., which affected investors' investment decisions, contain information faithful to the investment

[3] The case holding that in a case where an asset management company and a distributor are liable to compensate investors for damages suffered by them due to their joint tort in a case where the company and the distributor are liable to compensate investors for damages caused by their joint tort, in accordance with the information provided by the asset management company, by issuing beneficiary certificates of the fund that most of the trust assets are invested in the over-the-counter derivatives with a significant risk of an asset management company, using information that may cause misunderstanding about important matters in sales assistance data, such as advertising paper and KUA data, or by providing information that lose balance as to the profits and risks of investment trust

[4] In a case where an asset management company that issued the beneficiary certificates of an fund investing in over-the-counter derivatives and an investor who sold them violated their duty to protect investors by failing to explain the risks to investors, etc., and thereby causing losses to the fund, the case holding that the investor’s losses occurred at the maturity point or at the time of redemption, and that at the time of redemption, losses that occurred until that time are related to the harmful act by the asset management company, etc

[5] The initial date of the occurrence of damages for damages due to a tort where there is time difference between the time of the illegal act and the time of the damage occurrence (=the time of damage occurrence)

[6] In a case where the issue is whether a final profit received by investors can be deemed as a profit that should be deducted after offsetting the amount of loss, in calculating the amount of loss suffered by an asset management company that issued the beneficiary certificates of the fund that invested in over-the-counter derivatives and investors who subscribed to the fund due to a violation of the duty to protect investors, the case holding that the final profit received by investors constitutes an element of calculating the amount of loss suffered by investors before offsetting the amount of loss, and that such profit cannot be deemed as a profit that should be deducted again based on the amount of

[1] Articles 19, 26, 56(2), and 57(1) of the former Indirect Investment Asset Management Business Act (repealed by Article 2 of Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635 of Aug. 3, 2007), Article 750 of the Civil Act / [2] Articles 4, 19, and 56(1) of the former Indirect Investment Asset Management Business Act (repealed by Article 2 of Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635 of Aug. 3, 2007), Article 750 of the Civil Act / [3] Article 760 of the Civil Act / [4] Articles 393, 750, and 763 of the Civil Act / [5] Articles 393, 750, and 763 of the Civil Act / [6] Articles 396, 750, and 763 of the Civil Act

[2] Supreme Court Decision 2004Da53197 decided September 6, 2007 (Gong2007Ha, 1521)

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

Han Bank Co., Ltd. and two others (Law Firm Gyeongsung, Counsel for the plaintiff-appellant)

Seoul High Court Decision 2010Na15532 decided October 29, 2010

All appeals are dismissed. The costs of appeal are assessed against each appellant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to the ground of appeal Nos. 2 and 1 to 3 of the Defendant Woori Bank, Gyeongnam Bank, and Gyeongnam Bank, the ground of appeal No. 1 to 3 of the lower judgment

A. The former Act on Business of Operating Indirect Investment and Assets (amended by Act No. 8635, Aug. 3, 2007; repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act; hereinafter “Indirect Investment Act”) does not merely provide an asset management company’s agent for the sale of beneficiary certificates, but also is in the position of soliciting investors in the name of investors and selling beneficiary certificates in the other party’s position. In a case where such a distribution company interferes with an investment trading with an excessive risk, or causes damage to investors by actively soliciting trading with an excessive risk in light of the customer’s investment situation, the distribution company is liable to compensate investors for losses caused by the illegal act (see, e.g., Supreme Court Decision 97Da47989, Oct. 27, 1998; 2007). Accordingly, the distribution company is not obliged to provide an asset management company with accurate explanation of the investment prospectus’s major contents, such as the investment prospectus’s duty to provide investors with information and explanation of the investment prospectus’s major contents, such as investment risk.

In addition, an asset management company provided for in the Indirect Investment Act is in a position of producing and distributing information about investment trusts as the founder and operator of investment trust, as well as a direct interest in the sales of beneficiary certificates even in a case where the asset management company does not directly take charge of the sales of beneficiary certificates. Such asset management company is obligated to protect investors by providing correct information about the profit structure and risk factors of investment trust so that investors can make reasonable investment decisions based on such information (see Supreme Court Decision 2004Da53197, Sept. 6, 2007). Information provided by an asset management company in the course of sales of beneficiary certificates is basically a content of investment prospectus. However, in a case where the asset management company directly prepares and delivers and delivers sales auxiliary materials that assist investors in understanding the contents of investment prospectus in addition to investment prospectus, or advertisements that inform the characteristics of the investment trust, such sales auxiliary materials or advertisements have lost the profit and risk factors of investment trust that may cause misunderstanding to investors, and as a result, it did not affect the asset management company’s investment judgment.

B. The reasoning of the lower judgment and the evidence duly admitted by the lower court reveal the following.

(1) No. 1 of this case is an investment trust with the maturity of at least 1.1 November 1, 2005 the date of creation of 5 OTC derivatives plus at least 1.1.22 of 201, most of its trust assets is linked with the revenue structure of OTC derivatives No. 1 of this case. 12 of OTC derivatives with the annual maturity of at least 1. 5 OTC derivatives with the annual maturity of at least 1. 5 OTC derivatives with the annual maturity of at least 1. 1. 6 ETC derivatives with the annual maturity of at least 1. 1. 0% of the total amount of its principal and interest rate of at least 1. 5 OTC derivatives with the annual maturity of at least 1. 1. 5 ETC derivatives with the annual maturity of at least 1. 0% of the total amount of its principal and interest rate of at least 1. 10% of the total amount of its total net assets to be recovered from 10% of the instant redemption principal of the Fund.

(2) No. 2 of this case is an investment trust of over-the-counter derivatives with the maturity of 12.28 December 205, 201 the date of creation of the 5-year OTC derivatives plus the 6-year redemption rate of 10% interest rate of 6-year OTC derivatives. The revenue structure is linked with the revenue structure of over-the-counter derivatives No. 2 of this case because most of the trust assets is invested in No. 2 of the OTC derivatives. 2 of this case. OTC derivatives of this case are no less than 6-year redemption rate of 10% of the total amount of securities listed on the 5-year redemption rate of 6-year redemption interest rate of the 6-year redemption rate of the total amount of securities listed on the 5-year redemption rate of 2-year redemption rate of the total amount of securities listed on the 5-year redemption rate of the total amount of securities listed on the 5-year redemption rate of 10% of the total amount of securities listed on the 5-year redemption rate of 10%.

(3) The investors who subscribed to each of the instant funds may claim redemption of beneficiary certificates to the selling company even before maturity. The repurchase price shall be calculated based on the base price publicly announced by Defendant Korea Asset Management Co., Ltd. (hereinafter “Defendant management”) on the 14 business days (15 business days if the request for redemption was made after lapse of 17 cc) from the date of the request for the claim for redemption, and the repurchase price shall be deducted from the amount. The base price of each of the instant funds shall be calculated based on the assessed value of each of the instant OTC derivatives. The base price of each of the instant OTC derivatives shall be calculated based on reflecting the assessed value of each of the instant OTC derivatives. The price of each of the instant OTC derivatives in consideration of the price of each of the instant OTC derivatives, which is the management company of each of the instant OTC derivatives, is assessed and calculated by the Indirect Investment Property Evaluation Committee, taking into account the presentation price offered by reflecting various factors, such as the level of the

(4) As an asset management company under the Indirect Investment Act, Defendant Korea established each of the instant funds and issued beneficiary certificates, and Defendant Korea Bank Co., Ltd. (hereinafter “Defendant Korea Bank”) and Gyeongnam Bank Co., Ltd. (hereinafter “Defendant Gyeongnam Bank”) sold the beneficiary certificates of each of the instant funds to investors as a distributor under the Indirect Investment Act. Defendant Korea sold Plaintiff 6, 7 the beneficiary certificates of the fund set forth in subparagraphs 1 and 2 to Plaintiff 3, 4, 5, and 8, the beneficiary certificates of the fund set forth in subparagraph 1 and 2 to Plaintiff 3, 4, 5, and 8, and the beneficiary certificates of the fund set forth in subparagraph 1 and the beneficiary certificates of the fund set forth in subparagraph 2 to Plaintiff 1, 2, and Defendant Gyeongnam Bank sold the fund set forth in subparagraph 1’s beneficiary certificates to the National Forestry Association at time of closing the argument in the lower judgment. The Plaintiffs filed a claim for redemption even before receiving the redemption.

(5) With respect to each OTC derivatives of this case, a credit rating of each of the instant OTC derivatives was granted A3 investment eligible credit rating, which is the credit rating company at the time of its issuance. The credit rating of each of the instant OTC derivatives does not evaluate the issuer’s ability to pay principal and interest, but rather evaluate the possibility of payment of principal and interest by compiling cash flow according to the profit structure of the bonds, the credit rating of the issuing agency, and the scenario of stock price fluctuation as statistical techniques, and the rating method is different from that of general bonds (bonds). There is no special reference in each of the instant investment prospectus regarding the fact that each of the instant OTC derivatives was granted A3 credit rating from ETC derivatives. There is no possibility that each of the instant OTC derivatives is more likely to incur losses to principal and interest, compared to the instant advertising paper, COR, and CMF, and products with the statement that each of the instant funds was more likely to incur losses to principal and interest, and thus, it is difficult to have more emphasis on the probability that each of the instant OTC derivatives fund was paid by 3 commercial banks.

(6) The statement of risk factors of each of the instant OTC derivatives, which is the operator of each of the instant OTC derivatives, is indicated in the statement of additional information on derivatives transaction confirmation sent by CSSBi to Defendant us, stating that “The instant OTC derivatives entail considerable risk, and thus, it is appropriate for investors with knowledge and experience in financial and management issues necessary to assess risks and disadvantages of investment in OTC derivatives, to voluntarily review all risks factors prior to investment decision, conduct necessary research, and ultimately cover losses in total amount of investment.” However, Defendant 2 instructed investors to engage in sales activities of each of the instant OTC derivatives, who intend to stably operate retirement pay or other surplus funds in the form of pension fund, through LUA data on each of the instant funds distributed to Defendant Woori Bank and Gyeongnam Bank.

(7) The employees of the Defendant Woori Bank and the Gyeongnam Bank did not understand the characteristics or risks of each of the instant funds, when selling beneficiary certificates of the instant funds to the Plaintiffs, because they did not receive proper education on the structure of each of the funds, and did not sufficiently explain to the Plaintiffs that the instant funds are safe in terms of the structure and risks in which the redemption amount to be paid at maturity is determined by the fixed interest rate of the Republic of Korea at a fixed interest rate of “five-year government bond interest rate + 1.2% per annum per annum.” However, each of the instant funds merely emphasizes that “the fixed interest rate of the 5-year government bond + the fixed interest rate of 1.2% per annum every six years is a high-income product.”

C. Examining these facts in light of the legal principles as seen earlier, each of the instant OTC derivatives subject to the principal investment of each of the instant funds is a structural bond issued based on a stock swap (EDS), which is a very small financial term investment company, and the factors leading to determining the possibility of loss of the investment principal are different from general bonds or bank deposits. The quarterly final revenue with the stock swap premium as the major financial resources are also different from ordinary bonds or bank deposits, and it is difficult for investors to know that its nature differs from ordinary interest rates. Accordingly, the Defendants, upon accurately understanding the profits and risks of investment of each of the instant OTC derivatives, have a duty to protect investors by providing accurate information so that investors can make reasonable investment decisions, and explaining the contents thereof so that investors can understand them. However, in light of the above, the Defendants’ obligation to use the instant OTC derivatives derivatives investment fund’s respective investment risk and its risk of loss to each of the instant financial institutions or by providing investors with accurate information on the risk of misunderstanding each of the instant securities investment trust and its risk of loss.

In the same purport, the lower court was justifiable to have determined that the Defendants committed a joint illegal act in violation of the duty to protect the Plaintiffs. In so doing, the lower court did not err by misapprehending the legal doctrine on the duty to protect investors of an asset management company and a distributor under the Indirect Investment Act, or on the causal relationship

In addition, this part of the defendants' remaining grounds of appeal are nothing more than misunderstanding the evidence preparation and fact-finding, which are the exclusive authority of the fact-finding court, and it cannot be a legitimate ground of appeal.

The Defendants’ ground of appeal on this part is without merit.

2. As to the ground of appeal No. 2 by Defendant South Korea Bank and Gyeongnam Bank, the ground of appeal No. 5 by Defendant South Korea is with merit.

Property damage caused by an illegal harmful act is a difference between the property disadvantage caused by the illegal harmful act, i.e., the property condition that would have existed without the illegal act and the current property status that caused the illegal act, and includes active damages that would have lost the existing interest and passive damages that could not obtain the benefit futurely. Whether such damage has actually occurred or not shall be determined reasonably in light of social norms (see, e.g., Supreme Court en banc Decision 91Da33070, Jun. 23, 1992; Supreme Court Decision 97Da4760, Aug. 25, 1998).

In light of the aforementioned legal principles, the damages suffered by the Plaintiffs due to the Defendants’ violation of the duty to protect investors are the total amount of the invested amount that could not be recovered by joining each of the funds of this case and the total amount of actual profit that could not be gained from the future. However, in principle, the Plaintiffs’ investment decision due to the Defendants’ violation of the duty to protect investors was based on the premise that they hold beneficiary certificates until maturity. However, the Plaintiffs were granted options to redeem beneficiary certificates prior to maturity. However, it is difficult for the Fund to pay quarterly settlement revenue up to maturity and estimate in advance the amount that can be recovered by maturity due to the structure in which the base price changes. Thus, the damages suffered by the Defendants due to the Defendants’ violation of the duty to protect investors are realistic and conclusive at maturity or at the time of actual redemption, and the damages suffered by the Plaintiffs up to that time are causal relations with the Defendants’ harmful act. On the contrary, it cannot be deemed that only the damages suffered up to that time at which the Plaintiffs were served with a notice on redemption or immediately after the redemption.

In the same purport, the court below is just to calculate the amount of damages by recognizing the damages as at the time of actual redemption, and there is no error of law by misapprehending the legal principles as to causation or the time of loss compensation in tort liability

The Defendants’ ground of appeal on this part is without merit.

3. As to the ground of appeal Nos. 4 of the Defendant Woori Bank and Gyeongnam Bank, the misapprehension of the legal principle as to special damages, and the ground of appeal No. 6 of the Defendant our operation

According to the reasoning of the judgment below, each of the funds of this case is with a six-year maturity, and the Defendants conducted sales activities of each of the funds of this case compared to the financial instruments with less risks, such as each of the funds of this case, national treasury bonds, commercial banks subordinate to commercial banks, and bank deposits. According to the above facts, barring any other special circumstances, the Plaintiffs, if they did not commit the Defendants, invested the principal invested in each of the funds of this case in the stable financial instruments with at least the interest rate corresponding to the fixed deposit interest and the corresponding interest rate, and thus, the Plaintiffs suffered special damages, which would have lost the expectation interest equivalent to the interest on fixed deposit in the invested principal due to the Defendants’ unlawful act, and the Defendants were also aware or could have known of such circumstances.

In the same purport, the court below is just in calculating the amount of damages by reflecting the actual profit of 5% per annum on the principal of the plaintiffs' fund, and there is no error of law by misunderstanding the legal principles on the requirements for special damage.

The Defendants’ ground of appeal on this part is without merit.

4. As to the ground of appeal Nos. 4 of the Defendant Woori Bank and Gyeongnam Bank, the misapprehension of the legal principle as to offsetting profits and losses, and the ground of appeal No. 7 of Defendant Korea

According to the reasoning of the judgment below, the court below acknowledged the facts, and found the plaintiffs' amount of damages as follows: (a) calculated in the formula of "amount calculated by adding the principal of each of the funds of this case and the actual profits from the interest rate of 5% per annum thereof - the amount of redemption received - quarterly final revenue; and (b) determined the amount calculated in consideration of the plaintiffs' negligence based on the amount of damages as damages to be compensated by the defendants. According to the above facts, the damages of the plaintiffs are actually and definitely accrued at the time when the plaintiffs redeemed each of the funds of this case and received the redemption price; and (c) the final profits received by the plaintiffs up to that time constitute an element of calculating the amount of damages by the plaintiffs prior to the offsetting of negligence; and (d)

Although there are some inappropriate parts in its reasoning, the court below's decision to the effect that it is an element of calculating the amount of damages of the plaintiffs, not a profit that should be deducted after offsetting the amount of damages after offsetting the amount of final profit. In so doing, there is no error of law by misapprehending the legal principles as to the elements of calculating the amount of

The Defendants’ ground of appeal on this part is without merit.

5. As to the plaintiffs' grounds of appeal Nos. 5 and 4 of the defendant's management

If the victim was negligent in causing or expanding damages in a tort compensation case, it should be taken into account as a matter of course in determining the scope of liability for damages. However, fact finding or determining the ratio of comparative negligence is within the exclusive authority of a fact-finding court unless it is deemed that it is considerably unreasonable in light of the principle of equity (see Supreme Court Decision 2002Da43165, Nov. 26, 2002).

According to the reasoning of the judgment below, the court below set the ratio of negligence of the plaintiffs to 60% or 70%, taking into account the various circumstances as stated in its reasoning, and accordingly set the ratio of liability of the defendants to 40% or 30%. The court below's fact-finding or its determination as to the grounds for offsetting negligence to the extent acceptable cannot be deemed as considerably unreasonable in light of the principle of equity, and there is no error of law by misunderstanding the legal principles as

The Plaintiffs and Defendants’ ground of appeal on this part is without merit.

6. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against each appellant who has lost. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Ji-hyung (Presiding Justice)