2017Do18164 Violation of the Financial Investment Services and Capital Markets Act

Defendant 1 and five others

Defendant 4, Defendant 5, Defendant 6, and Prosecutor (Defendant 1, Defendant 2, and Defendant)

Appellant 3, Defendant 4, and Defendant 6

Law Firm (LLC) et al.

Seoul High Court Decision 2016No313 Decided October 19, 2017

October 29, 2020

The part of the lower judgment against Defendants 1, 2, 3, 4, and 6 is reversed, and that part of the case is remanded to the Seoul High Court.

Defendant 5’s appeal is dismissed.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate brief filed).

1. As to the prosecutor's grounds of appeal

A. Summary of this part of the facts charged and the judgment of the court below

1) Summary of the facts charged

around October 10, 2013, Defendant 1, Defendant 2, and Defendant 3, who belongs to the ○○○○ Team of the lower court, Co-Defendant 4 Co-Defendant 4, a KOSDAQ-listed corporation (hereinafter “Co-Defendant 4”), acquired the information that “the operating income of the company is only seven billion won due to the enemy, such as the broadcast sector,” and conspired to sell the information that “the total operating income of the company is only seven billion won,” around the 15 and 16th day of the same month, Non-Party 1 and Defendant 4, Defendant 5, and Defendant 6, who were in charge of corporate analysis of Defendant 4 Co-Defendant 4, the lower court’s Co-Defendant 4, a KOSDAQ-listed corporation (hereinafter “Co-Defendant 4, the lower court’s Co-Defendant 4”), Defendant 3 and Defendant 3, Defendant 5, Defendant 2 and Defendant 6, Defendant 2, and Defendant 2, Defendant 5 and the total asset management total amount of KRW 60888, and KRW 57080.

2) The judgment of the court below

Of the facts charged against Defendant 4, the lower court acquitted Defendant 1, Defendant 2, and Defendant 3 (hereinafter “Defendant 1, etc.”) on all of the charges, on the ground that the “other persons” under Article 174(1) of the Financial Investment Services and Capital Markets Act (hereinafter “Capital Markets Act”) should be limited to the person who received the information directly from the information provider, and the person who received the information again from the information provider is subject to punishment only when the person who received the information and the person who received the information again serves as a single subject. In so doing, the lower court acquitted Defendant 1, Defendant 2, and Defendant 3 (hereinafter “Defendant 1, etc.”) on all of the charges against Defendant 4, on the part of the facts charged against Defendant 4, on the provision of information to Nonindicted 2 (No. 6 of the lower judgment on the list of crimes in the attached Form of the lower judgment), and on the part of Defendant 6, on the charge of providing information to

한편 원심은 피고인 6에 대한 공소사실 중 ◇◇◇◇◇◇◇◇◇◇ 소속 펀드매니저 공소외 4에 대한 정보제공행위(원심판결문 별지 범죄일람표 기재 11번) 중 공소외 5의 매도 부분에 관하여는, 공소외 5가 피고인 6으로부터 전달받은 이 사건 정보를 이용하여 거래하였다고 인정하기 어렵다는 이유로 이유에서 무죄로 판단하였다.

B. Judgment of the Supreme Court

1) Of the charges against Defendants 1, 2, 3, and 4 and the charges against Defendants 6, the part on the act of providing information to Nonindicted 3, 1, 3, and 3 of the fund management of △△△△.

A) Article 174(1) of the Financial Investment Services and Capital Markets Act prohibits a person falling under any of the following subparagraphs (i.e., the internal person of a listed corporation or the first information recipient (hereinafter “user”) from using or allowing another person to use material nonpublic information related to his/her business affairs, etc. in trading or other transactions of specific securities, etc. In prohibited acts under the said provision, “the act of allowing another person to use material nonpublic information in trading or other transactions of specific securities, etc.” refers to the act of providing such information to another person or allowing another person to use such information for trading or other transactions of specific securities, etc. by allowing another person to use such information, etc. In such a case, the other person cannot be deemed to have necessarily received information from a criminal. Accordingly, not only the case where the person directly receiving the information allows another person to use the information in trading the relevant information, but also the case where the person who received the information through the said person allows another person to use such information at the time of providing the information, such as the information delivery and delivery of the information, should be deemed to be included in the above prohibited act.

(1) A penal provision shall be strictly interpreted and applied in accordance with the language and text, and shall not be extensively or analogically interpreted to the disadvantage of the defendant. However, systematic interpretation that clearly expresses the logical meaning of the language and text in light of the legislative intent and purpose, etc. within the scope of the possible meaning of the language and text does not violate the principle of no punishment without the law (see, e.g., Supreme Court Decisions 2010Do1388, Apr. 11, 2013; 2017Do10122, Dec. 7, 2017).

(2) The Standard Dictionary of Korean Language published by the National Institute of Korean Language defines “other persons” as “other persons.” Moreover, the concept of “other persons” is not differently defined under the Capital Markets Act, and Article 174(1) of the said Act does not provide for limitation or exception to other persons or provide for the relationship between the other persons and the other person as the requirement.

(3) Article 174(1) of the Financial Investment Services and Capital Markets Act lists a provider of information subject to punishment in a limited manner under subparagraphs 1 through 6, and provides that the first information recipient under subparagraph 6 is “person who received undisclosed information from the insiders,” but this is not a provision regarding the scope of the recipient and the concept of “person,” among the forms of prohibited acts. Meanwhile, the concept of “person,” which is not restricted by legislators on the ground of the possibility of deterioration in the process of transmitting information, cannot be construed as limited to the literal interpretation of the concept of “person,” rather than a provision regarding the concept of “person,” which is not restricted by legislators on the ground of the possibility of deterioration in the process of transmitting information (where the information was changed during the process of delivery, it should be considered in determining the requirements of nonpublic information). It cannot

(4) The reason why Article 174(1) of the Capital Markets Act prohibits the use of undisclosed important information is because, in the case of an internal company, there are many opportunities to know in advance important information that may affect the share price of a listed company, it is more favorable position than ordinary investors in the securities transaction, while ordinary investors are likely to suffer losses. The loss of the other party due to the use of undisclosed information is not caused due to the lack of capacity or the absence of care, but caused by the use of undisclosed information by multiple offenders, such as the insider, etc. for his own interest. Such use of undisclosed information goes against the legislative intent of the Capital Markets Act to protect investors so that the participating parties can make transactions on the same possibility as that it is possible, and to establish the fairness, reliability, and soundness of the capital market (see, e.g., Supreme Court Decisions 93Do695, Apr. 26, 1994; 90Do6981, Dec. 18, 2002).

B) In light of the above legal principles, Defendant 1, Defendant 2, Defendant 3, and Defendant 6, the other party directly received the instant information from the said Defendants, constitute a principal offender. The fund managers of the asset management company listed in the crime list attached to the judgment below, which received the information from the above Defendants or participated in the middle, shall be deemed to constitute “a third party” under Article 174(1) of the Financial Investment Services and Capital Markets Act. Therefore, the lower court should have determined that the act of this part of the facts charged constitutes “the act of allowing the third party to use material nonpublic information” under Article 174(1) of the Financial Investment Services and Capital Markets Act. Accordingly, the lower court did not err by misapprehending the legal principles on “the act of causing the third party to use material nonpublic information” under Article 174(1) of the same Act, thereby adversely affecting the conclusion of the judgment, thereby failing to exhaust all necessary deliberations by the prosecutor’s judgment. It should have determined that the lower court erred by misapprehending the legal principles on the information provision under Article 174(1 of the Financial Investment Services and Capital Markets Act.

2) 피고인 6에 대한 공소사실 중 ◇◇◇◇◇◇◇◇◇◇ 소속 펀드매니저 공소외 4에 대한 정보제공행위로 인한 공소외 5의 매도 부분

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court did not err in its judgment by misapprehending the legal doctrine regarding the act of providing undisclosed information under Article 174(1) of the Capital Markets Act and by misapprehending the bounds of the principle of free evaluation of evidence against logical and empirical rules.

3) The remainder

In submitting a petition of appeal, the prosecutor stated to the effect that he is dissatisfied with the entire judgment except for Defendant 5’s portion among the judgment below. However, the petition of appeal or the appellate brief did not state the grounds of appeal as to the remaining Defendants’ conviction except Defendant 5 in the judgment below.

2. As to the grounds of appeal by Defendants 4, 6, and 5

원심은 판시와 같은 이유로, 피고인 4에 대한 공소사실 중 △△△△△△△ 소속 펀드매니저 공소외 2에 대한 정보제공행위를 제외한 나머지 부분, 피고인 5에 대한 공소사실 중 □□□□□□ 소속 펀드매니저 공소외 6에 대한 정보제공행위로 인한 공소외 7의 매도 부분을 제외한 나머지 부분, 피고인 6에 대한 공소사실 중 □□□□□□ 소속 펀드매니저 공소외 3에 대한 정보제공행위 및 ◇◇◇◇◇◇◇◇◇◇ 소속 펀드매니저 공소외 4에 대한 정보제공행위로 인한 공소외 5의 매도 부분을 제외한 나머지 부분을 모두 유죄로 판단하였다.

Examining the reasoning of the lower judgment in light of the relevant legal principles and evidence duly admitted, the lower court did not err in its judgment by misapprehending the legal doctrine regarding the causal relationship between the Defendants’ intentional act of providing information and the act of using information, the scope of other persons, the subject of information and the corporation, the meaning of material nonpublic information, the timing of creation, the extended interpretation or analogical interpretation prohibition principle, the principle of no punishment without the law, the principle of no punishment without the law, the responsibility for acts and the principle of self-responsibility, the principle of presumption of innocence, the principle of presumption of innocence, and the principle of trial on evidence, or by misapprehending the bounds of the principle of free evaluation of evidence in violation of logical

Meanwhile, Defendant 4 and Defendant 5 stated to the effect that they are dissatisfied with the entire judgment of the court below in submitting a petition of appeal. However, as to the acquittal portion of the reasoning of the judgment of the court below, the aforementioned Defendants did not have the right to appeal against the said Defendants, this part of the appeal is unlawful (see, e.g., Supreme Court Decisions 93Do1091, Jul. 29, 1994; 201Do1200, Dec. 27, 2012).

3. Scope of reversal

For the same reason as seen earlier, the entire part of the judgment of the court below against Defendants 1, 2, and 3, the part against Defendant 4, the part against Defendant 6, and the part against Defendant 6’s non-indicted 3, among the part against which the reasoning was acquitted, should be reversed. However, among the judgment below, the part against Defendant 4 and Defendant 6, the part against Defendant 6, among the part against which the judgment of the court below was found guilty, is a single comprehensive crime with the part against which the judgment of the court below was not guilty

4. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the part of the judgment below against Defendants 1, 2, 3, 4, and 6 is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. Defendant 5’s appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Noh Jeong-hee

Chief Justice Park Sang-ok

Justices Kim Jong-hwan