2013Gohap1329 Violation of the Financial Investment Services and Capital Markets Act

1. A;

2. B

Kim Young-young (prosecutions) and Kim Jong-Un (Trial)

Attorney C (Korean National Assembly for Defendant A)

Attorney E, F, and G (Defendant B) in charge of Law Firm D

Attorney I in charge of H Law (Defendant B)

April 11, 2014

Defendant A shall be punished by imprisonment with prison labor for a year and six months, and by imprisonment with prison labor for a year.

except that the execution of each of the above penalties shall be suspended for three years from the date this judgment becomes final and conclusive.

To order Defendant B to provide community service for 120 hours.

Facts of crime

1. Defendant A [related to J’s primary manipulation (from December 29, 201 to March 26, 2012)]

A. On June 2008, K, the president of the KJ (hereinafter referred to as the “J”) borrowed approximately KRW 13 billion of the J shares owned by himself as collateral on and around June 2008. On and around December 201, 201, the principal and interest of the above borrowed amount were approximately KRW 1.5 billion.0 billion of the J shares owned by himself. K intended to sell approximately KRW 9.7 million of the J shares, and repay the borrowed amount.

At the time JJ was approximately KRW 5,000 per share, and on December 2, 2011, K agreed that with respect to L, M, L, and M’s shares 2 million stock owned by K in the middle of the mid-201, K acquired a block with a price exceeding KRW 8,00 per share of at least 8,00 per share of the trading price of the block with a view to purchasing more than KRW 8,00 per share of the trading price of the block with a view to purchasing more than KRW 8,00 per share, such as L and M.

Since December 29, 2011, L and M controlled the market price of J shares by means of offering stocks for mortgage at the time of collecting J shares or demanding the collection of incentives to be received from K to Defendant A, N,O, etc. from around December 29, 201.

Defendant A submitted an order of market price control, and had the branch P sell and purchase J shares in bulk. Defendant A also sold and purchased J shares by means of the account in the name of Defendant A and Q. On January 2012, Defendant A introduced S that 580,00 shares of J shares held by C Co., Ltd. are able to take over the above 580,00 shares in order to prevent stock price decline in order to prevent stock price decline in the stock market by selling 580,000 shares to L, R, etc., and provided them with L and Q to purchase the above 580,00 shares of J shares received through L and M as collateral.

(b) Market price manipulation of stocks;

Defendant A, as above, in collusion with K, L, M. S, etc. in order to control the market price of J shares;

From December 29, 201 to March 26, 2012, through 127 securities accounts in the course of trading the J shares using 114 securities accounts, etc. with a total of 114 persons, including V-registered securities accounts, and, in order to mislead any other person into or mislead any other person to make a wrong judgment, 153,293 shares and trading at a total of 192 times, 192, and 76,647 shares and high-priced price orders, total 328,710 shares, total 785,40,192 shares, total 20,40,748 shares, 53,167, 271, 270 shares and 47, 270, 271, 275 shares and 47, 270, 2747, 270, 275, 2714, 276, 274, etc.

Accordingly, in collusion with K, L, M, and S, Defendant A acquired unjust enrichment by creating a misunderstanding that the transaction of J with respect to the trading, or by causing another person to make a wrong judgment, or by causing another person to make a false judgment, or by making a price manipulation such as stock trading, for the purpose of inducing the trading.

2. Defendant B [related to the second price manipulation of J shares (from May 2, 2012 to September 21, 2012)]

(a) The background and conspiracy of crimes;

Since the artificial share price support as set forth in Paragraph 1, the J shares reached 11,900 won per share on March 26, 2012, the block with which K et al. planned was not sexually dead, and thereafter the share price was reduced by 8,000 won per share at the end of April 2012.

K borrowed KRW 15 billion from W around June 2012, and offered additional security of KRW 4,00,000,000 which it owns, including KRW 13 billion around June 2008, and 4,000,000,000 as security provided to the securities company and bond company.

At the time, K offered about 9.7 million shares of J to the securities company and the bond company as collateral. If the stock price drops and the collateral ratio is 130 to 150%, K traded traded against the above collateral shares, and the risk of losing the status of major shareholders and the right of management has occurred, K requested L to support the share price more actively.

L, as an employee of the securities company, provided three borrowed-name accounts containing a stock purchase fund, cash KRW 100 million, and 15,000 shares for collateral. Defendant B, as well as the accounts received from L, submitted L with L’s instructions or their own judgment by using the accounts in the name of customers that he operated, and purchased J shares in large volume.

(b) Market price manipulation of stocks;

Defendant B, as above, conspired with K and L to control the market price of J shares consecutively, from August 27, 2012 to September 21, 2012, with a total of 136 securities accounts, including V-registered securities accounts from around August 27, 2012 to around September 21, 2012, for the purpose of inducing others to make a wrong or wrong judgment as to trading of J shares, as if trading were in the course of trading by using 170 securities accounts, etc., 2. A., 207 times in total as described in Article 278-484, 207-209,017-207, 2.3 times in total, 1,562 times in total, 68-682, 196-1, 460-1, 360-1, 47, 97, 194, 46-1,50-1,06,06.

As stated in Section 75-96, 22 times in total, 94,212 as a closing order of the 94,212 note, the J share price was artificially increased from KRW 7,950 to KRW 8,1804) and 102.89% in addition to attached Table 2. In addition, the J share price was illegally increased and the amount was not known.

Accordingly, Defendant B, in collusion with K, L, etc., obtained unjust enrichment by creating a false misunderstanding that the transaction of J with the intention of causing a false judgment, or by causing another person to make a false judgment, or by causing other person to buy and sell stocks with a view to soliciting the transaction.

Summary of Evidence

【Paragraph 1 of this Article】

1. Defendant A’s legal statement

1. Legal statement of the witness M, and part of L’s legal statement;

1. The statement of the witness P in the third protocol of trial;

1. Each protocol of examination of a suspect against K, L, and X by prosecutors;

1. Each prosecutor's protocol of statement against M, S, Y, Z, T, and AA, and prosecutor's protocol of statement against AB (including the part of the AC statement);

1. AD's statement;

1. Investigation report [Report obtained by the JJ in relation to the operation of market prices], investigation report, AE, AF, AG, AH, L Account Number Verification remitted by M in the name of M in the investigation report, analysis report [Reports on the analysis of the transaction patterns, etc. relating to the person who has reported the manipulation of market prices (M), analysis report [report on the analysis of the form of market prices and the manipulation of market prices, report on the investigation [Attachment to AD statement related to the AK Fund], report on the analysis, and preparation of the list of crimes, such as orders for high-priced purchase in each market price manipulation section], investigation report [Attachment to the calculation of unjust enrichment for the primary manipulation];

1. Details of the certified transcript of a corporate register, summary of a company, etc., the JJ's market price confirmation document, etc., a stock sales contract, each M's account transaction statement, each M's account transaction statement, high-priced purchase order, etc., records of the unfair order submission of orders for the first market price operation period, such as L concealment documents, personal information on the first market price operation account, records of calculation of unjust enrichment, recording, each letter of confirmation, each letter of confirmation, balance sheet, loan certificate, receipt, receipt, QJ stocks transaction details, A and QJ stocks transaction order details, the order direction of P management market price manipulation, the details of each share purchase loan agreement, additional agreement, and LB bank account;

【Paragraph 2 of this Article】

1. Defendant B’s partial statement

1. Legal statement of the witness L;

1. Statement made by a witness AI in the third trial records;

1. Each protocol of suspect examination of L by prosecutors, and each protocol of suspect examination of prosecutor's office of K by prosecutors;

1. Analysis and report, the analysis and report by section of market price manipulation, and the preparation and report on the list of crimes, such as orders for high-priced purchase by section of market price manipulation;

1. Details of market price manipulation orders (the second place), details of unfair orders between the second place of market manipulations, documents of concealment, reports on the results of J general hearing, details of the second place of market price manipulation, details of BJ stock price manipulation, specifications of purchase and sale of BJ stocks, and details of B operation account flow, and details of purchase and sale of J stocks under the name of AJ;

Application of Statutes

1. Article relevant to the facts constituting an offense and the selection of punishment;

A. Defendant A: Article 443(2)2, 4, and 5, and Article 176(1)1, 2, and 3, and 176(2)1 of the former Financial Investment Services and Capital Markets Act (amended by Act No. 11845, May 28, 2013; hereinafter the same)

(b) Defendant B: Article 43(1)4 and 5 of the former Financial Investment Services and Capital Markets Act, Article 176(1)1, 2, 3, and 176(2)1 of the same Act, Article 30 of the Criminal Act

2. Discretionary mitigation;

Defendant A: Articles 53 and 55(1)3 of the Criminal Act (The conditions favorable to the reasons for sentencing below)

3. Suspension of execution;

Article 62 (1) of each Criminal Code (Consideration of the following grounds for sentencing), each of which is favorable, shall be considered as normal.

4. Probation and community service order;

Defendant B: Article 62-2 of the Criminal Act

Reasons for sentencing

1. The scope of punishment by law;

(a) Defendant A: Imprisonment for not less than one year and six months, but not more than fifteen years;

(b) Defendant B: Imprisonment with prison labor for not more than ten years;

2. The scope of sentence recommended according to the sentencing criteria; and

A. Defendant A

[Determination of Punishment] Crimes infringing on the fairness of the capital market (market manipulation) by securities and financing, the amount of which is not less than five hundred million won, and the amount of less than five billion won

【Special Convicted Persons】

○ Mitigation element: in a case where the degree of participation in a crime is minor, self-denunciation;

○ Aggravations: A case where the actual share price, etc. has significant impact or the scale of unfair trade has been very large.

[Scope of Recommendation] Imprisonment with prison labor for not less than one year and six months but not more than four years;

B. Defendant B

[Determination of Type] Crimes infringing on the impartiality of the capital market (market price manipulation) / below KRW 100 million

【Special Convicted Persons】

○ Mitigation element: a case where the degree of participation in an offense is insignificant;

○ Aggravations: Where the scale of unfair trade is very large.

[Scope of Recommendation] Imprisonment with prison labor for not more than six months and not more than one year and six months;

3. Determination of sentence;

Market manipulation act is not only an act that damages trust in the stock market and prevents the sound development of the capital market, but also an act that causes unexpected damages to unspecified general investors, and there is a great need for punishment.

(a) Defendant A: Imprisonment with prison labor for one year and six months; and

Considering the fact that the primary market price manipulation by Defendant A, including Defendant A, had a significant impact on the J share price, and that the amount of profit of Defendant A and his accomplices due to the above market price manipulation crime is considerable, Defendant A’s liability for the first crime of market price manipulation, which was involved in the first crime of market price manipulation by introducing and connecting the trade name of the market price manipulation force, is not easy.

However, the facts that Defendant A voluntarily surrendered to an investigative agency after the commencement of an investigation, and all of his own crimes are recognized, and the defendant A does not seem to play a leading role in the above crime; the defendant A does not have any criminal records other than the fine prior to and once due to drinking driving; and the defendant A does not have any profit from the actual acquisition of the above manipulation crime. Considering the favorable circumstances for the defendant A, the punishment shall be determined as ordered, taking into account the character and conduct of the defendant A, family relationship, circumstances after the crime, and other records and arguments of this case, taking into account the sentencing conditions as shown in the whole.

B. Defendant B: (a) considering the fact that the second market price manipulation crime by Defendant B, including Defendant B, with a probation of one year, 3 years of probation; (b) the second market price manipulation crime by Defendant B, including Defendant B, had a significant impact on the J share price; and (c) Defendant B had already been punished twice as a result of the market price manipulation in 2003 and 207, even if he had already been involved in the above market price manipulation crime, it cannot be said that as a securities company’s employee, the so-called so-called “the so-called “the so-called “the so-called “the so-called” means not only his own account, but also the customer’s account

However, the execution of imprisonment is suspended as ordered by considering the circumstances favorable to Defendant B such as Defendant B’s personality and behavior, family relationship, circumstances after the crime, and other factors revealed in the records and arguments, and the execution of imprisonment is ordered as ordered by Defendant B by taking into account the following: (a) Defendant B’s recognition of all of his criminal acts and the fact that Defendant B does not seem to play a leading role in the above criminal act; (b) Defendant B failed to obtain any benefit from the above criminal act; and (c) Defendant B appears to have been unable to obtain any benefit from the above criminal act due to the failure of the second manipulation; and (d) Defendant B’s two times of manipulation criminal records.

Defendant B’s acquittal

1. Summary of the facts charged

As above, Defendant B conspired with K, L, etc. to manipulate the J shares in order, and trading between May 2, 2012 and August 26, 2012 via 170 securities accounts with a total of 136 persons, including V-registered securities accounts, with a view to inducing any other person to make a wrong or wrong judgment as if the trading of J shares was conducted in the course of trading the shares with a total of 170 persons, including V-registered securities accounts. A. As described in paragraphs (1) through (277) of the crime sight table 277, 213,486 note, as stated in the most advanced agreement, and trading with a total of 277 times, 207, 2.2. B. list of crimes with a view to inducing the trading of listed securities, as stated in paragraphs (1) through (1) and (912) of the order list of high-priced securities.

C. As indicated in paragraphs 1 through 489, a total of 489 318,275 p.m. orders for reduction of volume; 2. D. 1,048 p.m. orders for purchase and sale; 2.e., a total of 1,048 p.m. orders for purchase and sale; 1,172,882 p.m. orders for purchase and sale; 2.00 p.m. orders for purchase and sale; 41 times in total as described in paragraphs 1 through 41 of the P.m. orders for sale and purchase; 2.f., a total of 44,568 p.m. orders for sale and purchase; 77,737 p.m. orders; and 2.09 p.m. orders for purchase and sale; 1,000 p.m. orders for purchase and sale; 2.1,000 p.m. orders for purchase and sale; and 3.01,000 p.m.

2. Determination

A. Generally, a person who participated in the crime as a co-principal in the course of a single comprehensive crime shall be held liable only for the crime after the participation, even though he was aware of the previous crime committed at the time of his participation in the crime (see Supreme Court Decision 97Do163, Jun. 27, 1997).

B. The following facts and circumstances acknowledged based on the records of this case, namely, (i) L was aware of Defendant B at around 2003, and only one-half times around 2005, but it was stated that Defendant B had contacted Defendant B during the period of August 2012, 2012; (ii) Defendant B’s account began to engage in the transaction of J shares from around August 27, 2012; and (iii) AI also stated that it was delegated the establishment of a securities transaction account under the name of the AI-type AJ and delegated the transaction of J shares upon Defendant B’s recommendation, based on the aforementioned adopted evidence alone, there is insufficient evidence to acknowledge that Defendant B conspired with K and August 26, 2012 in collusion with the aforementioned methods, and there is no other evidence to acknowledge that Defendant B participated in the transaction.

3. Conclusion

Therefore, as to this part of the facts charged, it should be pronounced not guilty under the latter part of Article 325 of the Criminal Procedure Act because it falls under the case where there is no proof of a crime. However, as long as the Financial Investment Services and Capital Markets Act was found to be guilty of the violation of the Financial Investment Services and Capital Markets Act from August 27, 2012 to September 21, 2012, the sentence

The presiding judge, the senior judge;

Judges Yang Sung-tae

Judges Shin Young-ju

1) Peremptory Price during the period of December 28, 2012, March 26, 2012

3) Total Ga (8,24. Doz.) August 24, 2012

4) Peremptory Price as of September 5, 2012

5) Peremptory Price among the pages of July 3, 2012, 2012