2012Gohap725 Violation of the Financial Investment Services and Capital Markets Act

1. A;

2. B

3. C.

4. D;

Full-time indictments, mobile advices (public trials)

Attorney E, F, G, H (for defendant A, C, and D)

Law Firm I, Attorneys J, K and L (Defendant B)

February 20, 2014

Defendant A’s imprisonment with prison labor of two years and six months and fine of 500,000,000 won, Defendant B’s imprisonment with prison labor of two years and fine of 200,000,000 won, Defendant C and D shall be punished by imprisonment with prison labor of one year and six months.

When Defendant A and B fail to pay each of the above fines, each of the above Defendants shall be confined in a workhouse for the period calculated by converting KRW 500,000 into one day.

However, with respect to Defendant B, the execution of each of the above imprisonment years shall be suspended for three years, and with respect to Defendant C and D, for two years.

Criminal History Office

No one shall mislead any person to believe that the trading of listed securities is booming of active trading or trade such securities with an intention to attract another person to trade such listed securities, or trade such securities with a change in the market price.

Nevertheless, the Defendants: (a) purchased shares from around December 2009 through the Home Trading System (HTS) with each party’s own street north of Ulsan-gu M&A from around 104; (b) Defendant A used three accounts such as the Home Trading System (HTS) in the name of P or N; (c) Defendant B used three accounts in the name of his/her father; (d) Defendant B used two accounts in the name of his/her father; (e) Defendant C made two accounts in the name of his/her wife; and (e) Defendant D made one account in the name of his/her mother; and (e) made two accounts in the name of his/her mother; (e) made two accounts in the name of his/her mother; (e) made two accounts in the name of his/her mother; and (e) made two accounts in the name of his/her mother; (f) made it possible to purchase and sell shares at a high price or in order; and (f) made it possible to purchase and sell shares at a single time after the opening of the market price.

According to the above public offering on November 30, 201, the Defendants purchased and sold shares of Qu Co., Ltd. (R 2.2.2.2.2.2) listed on the securities market in Ulsan-gu M&T on the securities market. For the purpose of inducing the purchase and sale of shares, Defendant A again submitted 115,300 won high-priced 30 won high-priced 5,00 won high-priced 30 won high-priced 5,00 won high-priced 30 won high-priced 65,00 won high-priced 305,00 won high-priced 15,000 won high-priced 30 won high-priced 5,00 won high-priced 30 won high-priced 5,000 won high-priced 5,000 won high-priced 5,00 won high-priced 301 won high-priced 5,01 won high-priced 305,005 won high-priced 305,05,01 won high-priced 3.

After that, Defendant A submitted an order for purchase at KRW 15,300, the maximum purchase price of KRW 14:12:01; KRW 189,09; KRW 5,300, the maximum purchase price; around 14:13:08; KRW 14:18:45; Defendant D submitted an order for purchase at KRW 17,500; Defendant D submitted an order for purchase at KRW 2:22:46; KRW 14:45; KRW 14:55; KRW 14:5; Defendant B submitted an order for purchase at KRW 14:5:5; Defendant B submitted an order for purchase at approximately KRW 14:32:5:57; and Defendant A submitted an order for purchase at approximately KRW 14:50; and Defendant B submitted an order for purchase at approximately KRW 14:25:50,650; and Defendant B submitted an order for purchase at approximately 14:205:15:205; and Defendant C purchased at approximately 2014:5:201:25:4:25, respectively.201.

In addition, Defendant A: (a) issued false orders for purchase (the purchase price is KRW 16.98,3690,00 for total purchase price) of 147,30 shares on the day between 15:00 and 15:18:04 and 15:18:00 for a total of seven occasions including four occasions between 15:0 and 15:30:30,00 and 16:40:29 for a total of 16.98,369; (b) the total number of orders for purchase (the purchase price is KRW 16.98,369,00 for a total of KRW 16.99,00 for the day) and 15:300 hours at a single time (the total number of orders issued at 424,937:34.7% of the total number of orders issued at the market outside of hours after the end of the contract and formed the external appearance by the time of the sale and sale.

In addition, on December 1, 201, the following day, Defendant A formed a false purchase order of 54,650 shares of 115,30 shares in total (the purchase order amount shall be KRW 6.3145,00 won in total) between 07:303 and 07:30:00 of 115,300 shares in the closing price (the purchase order amount shall be KRW 6.3145,00,000 in total) and the outside of time prior to the commencement of the funeral period shall be 103,217:52.9 percent of the total purchase order amount of the outside of time prior to the commencement of the funeral period by maintaining the outside of time and the closing price up to the expiration of the time period.

Furthermore, Defendant D purchased the above order from 08:40:31 to 08:41:37,00 won at a single time (08:00 to 09:0) for the determination of the market price; 08:00 won higher than the end price (115,300 won) 125,800 won higher than the end price (115,300 won); Defendant D purchased the above order from 08:40:31 to 08:41:37; Defendant B purchased the order at a high price of 4,700 won higher than the expected end price at 08:13:08; and Defendant B purchased the order at a high price of 125,700 won at 6,490 won; and Defendant D purchased the order at a high price of 129,700 won at 129,700 won; 3,500 won at 08:308:3888 of the market price without any falsity.

The Defendants, through the above orders, engage in the sale and purchase transaction of securities, creating a false appearance of active trading or changing the market price, and thereby, determined in KRW 8,700 with a higher market price of KRW 124,00 than the closing price on the day before the preceding day, the Defendants obtained profit margins by dividing the total purchase volume from 09:00:56 to 09:37:28 by 54 times in total.

(4) From December 24, 2010 to February 14, 2012, Defendants: 168,17, and 757 shares of 52 companies listed on the securities market and the KOSDAQ (hereinafter each company shall be limited to the names of the items at the securities market and the KOSDAQ) [the total purchase price of 2.9,23.1 billion won, daily maximum purchase price of 70 billion won, 23.6 billion won, daily maximum purchase price of 3.6 billion won, and 8 billion won, and 1.6 billion won, and 23.6 billion won, have investors purchase and sell new shares at a high price than 1.6 billion won, 1.6 billion won, 1.6 billion won, 5 billion won, and 5 billion won, and 5 billion won, and 1.6 billion won, and 5 billion won, and 50 billion won, more than 1.6 billion won, 1.6 billion won, more than 3 safe purchase and sale prices of new shares in the market price.

Summary of Evidence

1. Defendants’ respective legal statements

1. Some statements made by the Defendants in the suspect interrogation protocol of each prosecutor about the Defendants

1. A witness S or T's partial legal statement;

1. Statements made by witnesses S and U in the first trial records;

1. Partial statement made by each prosecutor's office against S and U;

1. A written statement of the S Preparation;

1. Investigation report;

1. The results and methods of investigating unfair trading of 52 stocks, including Q, conducted by the first and second trials in violation of the Securities and Exchange Act and the Securities and Exchange Act, and the place of committing the act (M building 104 photographs), public questions and warnings, written warning notes, the head of the stock transaction office, the head of the stock transaction office, the notification of the details of suspicions of unfair trading of the items of abnormal trading, trading details, and guidance;

Application of Statutes

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

A. Defendant A and B: Each of the former Financial Investment Services and Capital Markets Act (wholly amended by Act No. 11845, May 28, 2013; hereinafter referred to as the “former Financial Investment Services and Capital Markets Act”) Articles 443(1)5, 176(2)1, and 447(1) of the former Financial Investment Services and Capital Markets Act; Article 30 of the Criminal Act (wholly referred to as imprisonment and fine)

B. Defendant C and D: Each of the above Articles 443(1)5 and 176(2)1 of the former Capital Markets Act, and Article 30 of the Criminal Act (contributingly, choice of imprisonment)

1. Detention in a workhouse;

Defendant A and B: Articles 70 and 69(2) of the Criminal Act

1. Suspension of execution;

Defendant B, C, and D: each Criminal Code Article 62(1)(The conditions favorable to the reasons for sentencing below)

Judgment on the defendants' and defense counsel's arguments

1. Summary of the assertion

A. The main text of the facts charged of this case states that "the defendants artificially set the upper limit in the regular market, maintained the upper limit for additional purchase orders even after the upper limit was set, and then the market price on the following day after the issuance of additional purchase orders has been set higher than the closing price on the day, and then the market price on the following day has been set higher than the closing price." However, the facts charged is not specified, since the defendants trading day of the defendants did not form the upper limit for the share price, and there were days when the single market for the formation of the market price was not ordered in the single market.

B. The Defendants’ act is a kind of trading technique such as: (a) selection of items that can be invested by sufficiently checking whether there exists a defense in the market through the news and public notice information on a daily basis; (b) trend of items that can secure the sufficient quantity at the time of entering the upper limit due to a large volume of trading volume; (c) finding out items that show the highest purchase price in the market on the same day from among the various items; and (d) securing sales profit by securing the purchase volume by making orders for the items immediately before entering the upper limit and selling them on the first half of the following day; and (e) this is a kind of trading technique such as “the normal and acceptable price according to the stock market.” Thus, the Defendants’ act does not constitute “market price manipulation” under Article 176(2)1 of the former Capital Markets Act.

2. Whether the facts charged are specified

First, we examine whether the facts charged in the instant case are not specified, and ① if the Defendants’ act is found guilty, this constitutes a blanket crime, and in order to determine whether the Defendants’ act constitutes a market price manipulation prohibited by the former Capital Markets Act, it is necessary to comprehensively examine the Defendants’ series of transaction actions. ② Furthermore, the prosecutor presents individually and specifically specified the Defendants’ purchase orders and completion dates in the annexed crime list, and thus, it seems that it does not interfere with the Defendants’ exercise of rights to defense (defluences by analyzing the trades that the prosecutor is involved in the issues by day). ③ In addition, it is necessary to establish a crime of violation of Article 176(2)1 of the former Capital Markets Act, which the prosecutor decided in the instant case.

In light of the above, since the sale and purchase transaction of securities is conducted with the intention of inducing the sale and purchase, or with the intention of changing the market price, and since the elements of such an act of creating the market price are composed of an indefinite legal concept, the facts charged in this case are sufficiently specified, in full view of the following: (a) the formation of the upper limit, the purchase tax installment, the purchase tax installment in the outside market during the hours during which the maximum limit was set, the involvement in the formation of the market price of the root, and the realization of profit margin in the formation of the market for the following reasons: (b) the defendants' act constitutes a manipulation of market price, and it is reasonable to interpret that the transaction volume of the defendants is merely a representative example of the transaction volume of the defendants by asserting that the defendants' act constitutes a manipulation.

3. Whether the Defendants’ act constitutes market price manipulation

A. Relevant legal principles

1) "Purpose of inducing a trade" under Article 188-4 (2) of the former Securities and Exchange Act (amended by Act No. 8635 of Aug. 3, 2007 and repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act as of Feb. 4, 2009) is to make an artificial manipulation for the purpose of inducing a fluctuation in the market price, but it is not a matter of whether the market price is public or private with other purpose for the purpose of inducing a trade of securities by misunderstanding that the market price was formed by the natural demand and supply principles in the securities market, and the degree of awareness of purpose is sufficiently insufficient. On the other hand, "securities" under Article 18-4 (2) 1 of the former Securities and Capital Markets Act (amended by Act No. 8635 of Aug. 3, 2007 and enforced as of Feb. 4, 2009). It is not necessary to determine whether there is a difference in the market price or trading volume before and after the market price increase due to an indirect act.

2) Meanwhile, even if a purchase offer or purchase order that did not reach the conclusion of a sales contract has the nature of inducing a third party to purchase and sell securities with the effect of increasing or lowering the price of securities, it constitutes this, and only a false purchase order that was made without the intention of purchase to see as if the purchase order was much, constitutes a type of market price manipulation through so-called real transactions prohibited by Article 176(2)1 of the former Capital Markets Act (see Supreme Court Decision 2002Do1256, Jun. 14, 2002).

B. The judgment of this Court

1) Basic facts

According to the evidence duly adopted and examined by this court, the following facts can be acknowledged in relation to the Defendants’ transaction details on the 52 issues of this case.

A) From December 24, 2010 to February 14, 2012, the Defendants traded 52 items (hereinafter “the instant 52 items”) as stated in the reasoning, which were gathered by 104, Ulsan-gu MM building 104, Ulsan-gu, and as indicated in each corresponding column among the Defendants’ daily volume of purchase and purchase, the volume of sales orders and the volume of sales orders for each item are as listed in each corresponding column.

Details of transactions by date of the Defendants 1-1 (Purchase order quantity, purchase order quantity, purchase order quantity and sale order quantity: note)

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B) As seen in the description in the column of the “number” and “sale volume” in Table 1, the Defendants began to purchase most of the instant 52 items on a specific transaction day, and subsequently made a short-term transaction by selling the entire quantity on the next transaction day (except from 2-3 transaction day).

C) Of the purchase orders made by the Defendants in the course of making a trade as shown in Table 1, the public prosecutor: ① purchased orders (so, an expensive purchase orders; hereinafter referred to as “price purchase orders”) or the quantity of the purchase orders (so, an expensive purchase orders; hereinafter referred to as “unfair purchase orders”) which are higher compared to the immediately preceding or relative prices, or the sale prices from the sale subparagraph 1 A exceed the sale quantity; and filed a public prosecution against the instant items by asserting that the Defendants filed a public prosecution against the instant five items by asserting that: (a) purchase orders (so, a small quantity purchase orders; hereinafter referred to as “demand purchase orders”); (b) purchase orders (so, a false purchase orders; hereinafter referred to as “unfair purchase orders”) determined that the Defendants had no intention to purchase from the beginning among the purchase orders that were not followed by the conclusion of a sales contract; and (c) purchase orders (so, a false purchase orders; hereinafter referred to as “unfair purchase orders”) were entered in the list 1 through 52, and then, the Defendants filed a public prosecution against the instant items.

D) In addition, with regard to the fact that most of the Defendants’ transactions have been conducted over two transaction days, the prosecutor granted the sequences Nos. 1 through 182 from 1 to 182 on the basis of the line in the name of two transaction days, i.e., three transaction days on an exceptional basis, in principle, once the date on which the Defendants’ transactions have been made (which are also based on his defense counsel). The prosecutor stated that the “trade unit” in the table No. 1 is the same (However, if the Defendants are continuously traded on the grounds that the Defendants were again sold the entire shares of the relevant item after the date of sale, etc. among the specific trade units, the prosecutor stated that multiple trade units were indicated in one column).

E) During a period of approximately 1 year and 2 months, the Defendants issued an order to purchase approximately KRW 2.9,56.7 billion (the maximum purchase price per trading day is approximately KRW 70 billion and the maximum purchase price per trading day is approximately KRW 2.3.6 billion) in the course of trading 52 items in the instant 52 items for 2-4 trading days. However, when calculating the Defendants’ share of the purchase price in the total purchase price per trading day in the market for each item (hereinafter referred to as “shared share in the purchase price”). In addition, when calculating the share of the Defendants’ share of the purchase price among the total purchase price per trading day for each item, it is identical to the share of the purchase price in the table 1.

F) As a result, the Defendants obtained profit margins of approximately KRW 41.7 billion (in light of fees and taxes, etc., approximately KRW 38.6 billion) by the above trading, and the average of profit margins by trading unit is calculated as approximately KRW 229 billion ( KRW 200,000,000 in consideration of fees and taxes, etc.).

2) Whether the trading conducted by the Defendants constitutes market price manipulation

In full view of the following circumstances that can be recognized by the evidence duly adopted and investigated by this court based on the aforementioned legal doctrine, in light of the overall process of trade, the Defendants engaged in the transaction in which the market price and trading volume of the 52 items of this case to be formed in the free competition market according to normal supply and demand based on normal supply and demand, and thus, may sufficiently be recognized that there was a purpose of inducing other investors to trade the 52 items of this case by misleading other investors as if the market price was formed by the natural demand and supply principle in the securities market.

A) Characteristics of the 52 issues of the instant case

First, the 52 issues of this case traded by the defendants were as follows.

(1) Of the 52 categories of the instant 52 categories, “state F&M, KON, KON chips, mark chip, Mona, Monas, Barun, Blus, Blus, Bobs, Spans, Bobs, Spans, Spans, Spans, Bobs, Bobs, Q, Q, Qubs, Pubs, U.S., Habs, Habs, U.S., EG, and 21 categories of the instant 52 categories were classified as “states” among the stock investors, or as “states” in relation to the 18th presidential election policies of the said political parties.

(2) In addition, from among the remaining 31 categories, the 'Large Energy, Sa special lectures, Sazers's day, TKKKs day, and COPs day are the items listed recently at the time, and in the case of COP, the items listed on the date when the Defendants first traded. In the case of COP, the items listed on the day when the Defendants initially traded. In the case of COP, the five items were listed on three days before the Defendants traded. The largest shareholder of COP as of January 12, 2012 was considerably high (the largest shareholder of COP as of March 31, 2012 is 72.7% shares, and the largest shareholder of CO special lectures is 69.8% shares as COP, and the largest shareholder of COP as of COP is 30% shares of COP as of COP, 30% shares of COP as of COP. 45.7% as of New COP.

(3) On the other hand, the remaining 26 items except for the above 'Memaju' or 'new listing shares' were classified as 'small and medium-sized shares' in the stock market in light of the total market value. In most cases, on December 31, 2012, the total market value as of December 31, 2012 is either KRW 1 to KRW 2,00,000,000 or KRW 6,200,000,000,000, and on the other hand, a relatively large amount of the market value is merpo ( approximately KRW 782,50,000,000,000, KRW 373,000,000,000,000,000,000,0000,0000,000,000,0000,000.

As above, 21 of the 52 categories of the above 52 categories of the above 21 items were the items called ‘political. The time when the defendants traded,' which were called ‘politicals' and called ‘unregistered investors' regardless of the company's objective business value. The five items were the new listing shares of the largest shareholder, and there was no sufficient time to fully reflect the company's objective value in the stock price. As such, the changes in the stock price and trading volume in addition to the objective information such as the management performance of the company in question could be the important element of the investment judgment.

In addition, considering the fact that the maximum daily amount of the defendants mobilized for the purchase of shares exceeds 23.6 billion won as small and medium-sized owners, the defendants' purchase orders could have a significant impact on the share price formation.

B) Common characteristics shown in the Defendants’ purchase orders

Examining the details of the Defendants’ transactions by specific trading unit in the table 1 above, in cases where the Defendants make a large volume of orders for purchase of the heading price corresponding to the upper limit price at the time of increase in the price of the relevant item in the regular market to the nearest price on the day, and in cases where the sales contract was concluded with the purchase order by the Defendants, the remaining volume of the sales price ceases to exist and the price limit is set at the upper limit; (ii) in cases where the Defendants continuously make an additional purchase order at the time even in the circumstances where the upper limit of the price is recorded in the heading, even in which the price limit is recorded, (iii) outside time after the completion of the 15:00 to 15:30 to 18:00 from the end of the 15:0 to the 15:30 to the 18:00 from the following day, and the 07:30 to 08:30 from the beginning of the 08:30 from the following day, the Defendants make an additional purchase order.

(4) In the case where the defendants issued an order to purchase shares at a price higher than the expected concluded price in the market, the defendants' opening from 08:00 to 09:00, when the market was cancelled before the end of the market, and the sales of shares purchased after the commencement of the market was discovered in whole or in part from all sales units.

When calculating the number of the above 182 units among the above 182 units, and the ratio of the number of such units to the number of the sales units to the number of the total sales units, it is the same as the statement in the following table 2 'the characteristics of the purchase orders by the Defendants (hereinafter referred to as the "mark 2')' (However, in the case of "the order to form the upper limit", on the first transaction date of eight of the total 182 units, the share price did not reach the upper limit, so the ratio shall be calculated on the basis of 174 units).

Table 2 Characteristics of the Defendants’ purchase order

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C) As can be seen from the number revealed in the review table 2 of the defendants' mode of purchase order, the defendants were engaged in a type of trading. As to the reasons revealed in these characteristics, the prosecutor artificially set the upper limit in the regular market and maintained the upper limit by issuing additional purchase orders even in the circumstances where the upper limit was set, and the prosecutor claims that it was due to the fact that the market price was higher than that of the next day by the method such as the continuous purchase order, and the sale of shares and the realization of profits by selling the shares. On the other hand, the defendants are deemed to have been able to secure the quantity in the process of purchasing the shares only for the items that are expected to record the upper limit. Accordingly, the defendants' intent and the effect of the defendants' deliberation as to the above trading is the core issue of this case.

However, in the instant case (the Defendant discarded or replaced all mobile phones in which the contents of the Mesenger communications and text messages are stored at the time of commencing investigation into their trading in the Financial Supervisory Service) where evidence that clearly shows the reasons and motive for the Defendants trading was not submitted by the aforementioned method (the Defendant’s order method and details of trading are examined, and the Defendants’ internal intentions and their impacts are bound to be grasped, and thus, it should be examined as a series of times.

(1) Details of the Defendants’ trading

First, the following circumstances are discovered regarding the details and methods of the Defendants’ trading of the instant 52 categories.

(A) The Defendants gathered 104 of the Ulsan-gu M& building 104 that Defendant A leased and traded shares through seven securities accounts. The rest of the Defendants except Defendant A was relatively small-scale share trading, but there was no professional knowledge and experience in share trading (only there was a lack of work performed by a securities company as an employee). On the contrary, Defendant A was convicted of having been found guilty of having been guilty of having been found guilty of having been 1 share trading in the stock investment conference held by a securities company at least twice. In addition, there was a lot of experience in stock trading at the stock investment conference held by the securities company.

(B) However, Defendant B, C, and D did not independently sell shares according to each of the above MM buildings 104 or sell shares at the level of distribution by reporting Defendant A’s method of selling shares. However, Defendant A merely sent an order for purchase under his direction upon designating the items, quantity, and time.

(C) Meanwhile, examining the Defendants’ trade details in the regular market, not only overlap of trading items, but also the purchase orders were mostly made at the same time or less than 1 seconds.

(D) In addition, when the Defendants traded shares by gathering two years, Defendant B first contributed to KRW 100 million and raised the profits of KRW 10 billion. In the process of gaining such profits, Defendant C and D received trading orders from Defendant A, at any time, at KRW 50-60% of the profits. Defendant C and D received trading orders at KRW 500-7 million per month.

As above, the Defendants shared multiple securities accounts, and traded the same shares with the same contents. Considering these circumstances, the Defendants deemed that the Defendants had the intent to deliberate on the order of multiple investors to view the order as the order made by multiple investors at another place.

(2) Characteristics of purchase orders made in the regular market

Furthermore, we examine the characteristics of the purchase order of the 52 items of the defendants in the regular market.

1) First, as seen in Table 2, trade units equivalent to approximately KRW 2/3 of the total trade units were resulting in the Defendants’ purchase orders, and the share price of the relevant item was set at the upper limit.

In this regard, it is known that there are three investors who intend to actively purchase the relevant item on the basis of 'the 'theorological trend' and 'the experience of exaggeration that the share price of the item in which the upper limit was recorded would have not been sufficiently reflected in the share price when the price of the particular item reaches the upper limit,' and 'the experience of excessive purchase that there were many cases where the share price of the item in which the upper limit was raised for a certain period of time (the defendant and the defense counsel refer to 'the trade technique of the investors' as 'the upper limit').

However, even if the share price increases up to the upper limit, it cannot be predicted whether the upper limit will be formed due to the continuous introduction of the purchase price, or the increase in the order for sale order of investors holding that the price would be an opportunity to realize marginal profits even after the increase in the market price. ① The Defendants issued an order for purchase at a higher price than the other party in the whole 120 unit where the upper limit was formed by their order, and further, among these 26 units, issued orders with higher price than the other party in the 120 unit, and ② the Defendants issued a large volume of purchase orders exceeding the total selling order at the time of the above 120 unit, and thereby, the total volume of selling orders was reduced (excluding the first 13 unit where the entire order for purchase exceeds 10,000 times in the situation of 68 weeks, the remaining Defendants were found to have purchased at a higher price than 14 times in the 19th unit, and the remaining 14th unit in the 19th unit in the 120 unit in the sale order.

Ga. One time zone was repeated. However, in light of the fact that there was a possibility that the Defendants’ orders were likely to attract a resale price, it is sufficient to deem that the Defendants set the upper limit on the said 120 trading units, taking into account the following: (a) the share price sharply increased as a result of the Defendants’ sales volume in its purchase order; and (b) the maximum amount of purchase orders for one minute after placing orders was sharply increased compared to the purchase orders between the Defendants’ respective trading units in most of the said 120 trading units; and (c) the Defendants’ orders were likely to have drawn up a resale purchase price.

2) Next, with respect to the remaining 62 units, the upper limit was not set for the 8 units of health stand, 25 units of Medisa, 38 units of Basa, Q 90, 93, 95, 97, and 98 units of Q 97, 97, and 98 units of Nanocella, and 132 units of Nanocella, and the remaining 54 units of 54 units of trade are likely to have been established by orders of other investors, not by orders of the Defendants.

However, examining the details of transactions, most of the above 8 trading units were constantly issued by the Defendants in the regular market, but the price limit seems not to have been recorded. In the remaining 54 trading units, the Defendants did not have to record the upper limit from the beginning of the year and did not have to form the upper limit, or even the Defendants paid the purchase order to the upper limit, and the upper limit was formed by other people’s orders. In most of the above 62 trading units, most of the above 62 trading units commonly appear in the characteristics of the purchase order or the purchase order in the outside of the hour, even if there were some cases where the upper limit was not formed by the Defendants’ orders, this does not constitute a major obstacle to understanding the Defendants’ intentions and the effect of the purchase order in the middle of the year through a series of transactions.

(3) Under the upper limit of purchase orders and the characteristics of purchase orders in the overtime market, as seen in Table 2, the Defendants paid additional purchase orders when they reached the upper limit of the market price. In other words, the outside market, namely, the outside time, the outside of time, the outside of time, the outside of time, and the outside of the market, and the outside of the closing time, almost all of the additional purchase orders in the closing market.

In this regard, when the defendants paid each additional purchase order in a regular market under the upper limit of the regular market, and when the defendants paid each additional purchase order in an out-time market, the "ratio of purchase orders to which the actual purchase contract was entered into" and the ratio of the defendants' purchase order volume to the total purchase order volume at the end of each market" shall be calculated as stated in "the upper limit of Table 3" and "the ratio of each "the conclusion ratio" and "the ratio of the remaining purchase order volume" to the additional purchase order in an out-time market (" Table 3" hereinafter) (However, among the regular market, if only the expected conclusion price and anticipated conclusion quantity are open to the public and the number of expected conclusions are composed of three business days or more, the additional purchase order in the market is calculated only on the basis of the first two business days).

Additional purchase orders (unit: %) in the situation of the upper limit of Table 3 and in the outside market (unit: %) and the number of decimal places;

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The following circumstances can be revealed. ① The date on which the Defendants did not pay additional purchase orders after they reached the upper limit for the access time in the regular market is 30 days out of total 182 days, and all additional purchase orders were issued on the remaining 152 days (this refers to approximately 83.51% of total trading dates). The date on which additional purchase orders were actually concluded under the upper limit is 41 days, and even if only 41 days, the average of 31.80% of total purchase orders out of the total number of purchase orders issued on the 18th day after the conclusion of the sales contract is merely 31.80% of the total number of purchase orders issued on the 18th day after the conclusion of the sales contract. Also, even if the Defendants were to have purchased orders on the 18th day of the 19th day of the 18th day of the 18th day of the 19th day of the 10th day of the 12th day of the 15th day of the purchase order, the 20th day of the 10th day of the purchase order.

Even after reaching the upper limit on the hours of connection trade, the Defendants continued to make an additional purchase order in the following markets, and such additional purchase order accounts for a significant portion of the total purchase order volume of the pertinent market. As a result, it is apparent that the purchase price will come from the perspective of other investors from the perspective of other investors due to additional purchase orders.

As to this, the Defendants vindicated from the investigative agency to the date following this Court that they paid purchase orders in order to ensure the quantity of the pertinent item. However, as seen earlier, the Defendants’ additional purchase orders are too low in frequency and proportion of actual purchase orders. This is merely a result value, and it is considerably exceptional to simply marbly applied. ② In the case of a market, outside time after this Chapter ends, the purchase order price is fixed and the purchase order is “the first time order price is fixed.” As such, it is highly likely for the Defendants to purchase the shares first if they immediately open the market. However, considering that most other investors paid additional purchase orders after the purchase order was accumulated considerably after the date of the first purchase order, it is reasonable to view that the Defendants’ additional purchase orders are more likely to have continued to purchase the shares at the predetermined price than the market price prior to the date when the purchase order was concluded. ③ In addition, even if the Defendants first purchased new shares after the expiration of the purchase order, the Defendants’ additional purchase order is more likely to have continued to purchase the shares at the predetermined price or new purchase order price.

(4) Circumstances that the market price prior to the commencement of the Chapter can be seen from the characteristics of the purchase order in the market.

On the other hand, in 124 trading units except 58 trading units, the defendants issued a purchase order in a single market. Among them, 118 trading units were all purchased orders, and the most of the purchase orders were revoked in the remaining six trading units. On the other hand, the defendants only cancelled the purchase order in a high price to find out the market situation, and there was no intention to affect the formation of the market price.

① However, in the above 124 trading units, the Defendants’ purchase orders were closed at all on the preceding day, and most of them were expected to exceed the expected purchase prices at the time. As such, the Defendants’ orders were forced to increase the expected purchase prices due to the Defendants’ orders. ② Furthermore, the Defendants, in the case of partial purchase orders, at around 08:50 to 09:00, when the investors demand a change in the expected purchase prices and anticipated concluded quantities, were cancelled, and there was a possibility of misunderstanding investors. ③ In fact, the following market price was lower than the closing price in the above 124 trading units was lower than 3 trading units, and 5% higher than the next day. Considering the fact that the Defendants had no intention to actually purchase orders at the time of the first regular market and the fact that most of the Defendants had the intent to continuously purchase orders at the market price in order to grasp the situation where the Defendants had the intent to purchase orders at the market price in the above regular market market was to start.

D) In full view of the following circumstances as to the Defendants’ market control and the Defendants’ purchase order volume and the purchase volume in the entire market, the Defendants’ purchase order was made time distribution, and the characteristics of the instant 52 items, it appears that the Defendants had a considerable market control power.

(1) According to the aforementioned Table 1, the Defendants’ involvement rate in the purchase price for each trading day reaches a maximum of 35.77%, and 10% or more also appears as 98 trading days, and 30% or more is also 5 trading days ( May 25, 2011; May 30, 2011; 15, July 15, 2011; 201. 7. 10, Jul. 29, 201; 201; 335% or more of the average trading day is 7.38% or more of the average trading day, and even if the purchase price for each trading day is 0% or more of the purchase price for each trading day, it shall be deemed that the Defendants were involved in the purchase price for each trading day by disregarding the influence of the purchase price for each trading order.

(2) In addition, even if the defendants actually purchased shares, the ratio of participation in the purchase on each trading day reaches a maximum of 47.67%, and the date above 10% is 60%, and the date above 20% is also 14 trading days. In addition, the average ratio of participation in the purchase on each trading day is about 5.34%, but the average ratio of participation in the purchase on each trading day is also about 5.34%, and the number of participation in the purchase on each trading day is calculated by excluding days in which the purchase volume is below the low volume, due to the fact that the purchase price on each trading day is sold at least 0 or the previous trading day.

(3) As above, the Defendants’ purchase order volume or purchase volume accounts for a significant portion even when based on the entire trading date. Moreover, the time when the Defendants paid the purchase order and the time when the actual sales contract was concluded was too close to the market price limit of the relevant item, and the Defendants’ purchase order volume accounts for a significant portion in the outside market (as seen in Table 3 above).

(4) As seen earlier, part of the 52 issues of this case is "theme or new listing shares," and the trend of price and trading volume fluctuations was an important factor in investment judgment. As such, the Defendants’ purchase orders, compared to other issues, could have a greater impact on the price and trading volume fluctuations.

E) Lastly, as seen below, the Defendants’ purchase orders had a significant impact on the formation of the share price. As seen below, the Defendants’ purchase orders were acknowledged to have a significant impact on the formation of share price.

(1) The Defendants: (a) around the time when the share price of a specific item in the regular market is close to the upper limit, issued a large volume of order for high-priced purchase or order for low-priced purchase; and (b) in most cases, the share price of the relevant item was set at the upper limit for a short time; (c) although the price did not reach the upper limit, there were many cases where high-priced was formed.

(2) In particular, the Defendants were able to view that their market price is higher on the following day than the closing price as of the day immediately preceding the item purchased and that such situation should be maintained until the sale time, and thus, the Defendants seems to have been the most important interest in how the following market price is formed.

In this regard, in comparison of the closing price and the market price on the following day by each trade unit, the next day's market price is limited to five trading units (3,54, 102, 147, and 168), and the next day's market price is higher than the closing price on the preceding day. In particular, the trading units formed at a higher level than 5% among them are 80, 10% in total, and 18, and the average growth rate is calculated as about 5.11% in total.

The above results concerning the change in the market price and the closing price on the following day are merely because the defendant A correctly analyzed the information on the 52 issues of this case and predicted the flow of the share price well.

Rather, as seen in Tables 2 and 3 above, the Defendants continued and repeated purchase orders for a large volume of additional purchase orders in the market at the outside time, namely, the outside time market, the outside time market, the outside time and the outside time prior to the opening of the market, the closing of the market, and the closing of a large volume of additional purchase orders with little possibility of objectively concluding in the market (in the total of 182 sales units, there was no additional purchase orders or all purchase orders made out of the total 182 units), and the Defendants’ purchase orders had considerable market power over the outside time market, it is reasonable to deem that the Defendants’ additional purchase orders in the outside time market had an impact that it was difficult for the Defendants to disregard the formation of the market on the following day.

(c) Appraisal of the number of crimes;

1) Relevant legal principles

The legal interests protected by Article 176 of the Capital Markets Act, which prohibit market price manipulation, are the social legal interests that ensure fairness and smooth circulation of the transaction of stocks, etc., and individual property interests such as stock owners are not directly protected. Thus, if multiple acts falling under Article 176 of the Capital Markets Act continue to be repeated for a certain period following a single and continuous criminal intent for the purpose of stock price manipulation, a single comprehensive crime of violation of the prohibition of market price manipulation under Article 176 of the same Act is established (see, e.g., Supreme Court Decision 2011Do8109, Oct. 27

2) Determination

In light of the above legal principles, the legal interests infringed upon by the Defendants through market price manipulation of this case are identical to the social legal interests of ensuring the fairness and smooth circulation of trading of stocks, etc. In addition, the Defendants’ criminal law also constitutes a crime committed under the single and continuous criminal intent, since the Defendants enticed ordinary investors to purchase stocks at a high price and sold stocks at a high price, such as creating an upper price or a high price, and increasing the purchase balance by offering a large amount of false purchase orders without intent to purchase them actually. In addition, the instant market price manipulation only changes the subject matter, and the purpose thereof is to obtain profit margin through short-term trading of stocks, and thus, it can be deemed that the Defendants committed a single and continuous crime.

Therefore, the Defendants’ market price manipulation for the 52 issues of this case constitutes a single and continuous crime under the single and continuous criminal intent, and thus, all of them should constitute a single comprehensive crime.

Reasons for sentencing

In this case, market price manipulation like this is a crime that causes damage to investors by impeding the fair market price formation, and as a result, causes damage to the investor's trust in the market, and thus, the crime itself is not less severe, and the Defendants committed a total of 52 items continuously and repeatedly during the longer period of more than one year and two months, and thus, it is necessary to punish the Defendants corresponding to each crime.

In particular, since Defendant A had not only led the crime, but also had been punished for the most trade and market price manipulation through which false purchase orders have already been mobilized in 2004, it should be punished more strictly.

However, in the instant case, the Defendants used only pure real transactions, so it is clearly distinguishable from the perspective of the influence of other market manipulations that are often mobilized, such as conspiracy, virtual trading, internal government use, and the spread of false facts, etc., and the Defendants obtained enormous profit margins of approximately KRW 38.6 billion through the instant market manipulation. However, as seen below, as seen in the part of innocence, the Defendants 2, C, and D cannot be seen as the amount of unjust enrichment earned by the Defendants in light of legal principles, as instructed by Defendant A, and Defendant C merely issued purchase orders as instructed by Defendant A, and Defendant C did not have any criminal record other than once a fine for this type of crime, and Defendant B, and D did not have any criminal record.

In this case, the sentencing guidelines are not applicable since the public prosecution was instituted prior to the enforcement of the sentencing guidelines for securities and financial crimes. The sentencing guidelines are not applicable, taking into account all the above circumstances, and considering the difference between the defendants' participation in the crime and the details and degree of the involvement in the crime, the amount of profits acquired, etc., the punishment corresponding to the punishment shall be determined, and the execution of each imprisonment sentence shall be suspended with respect to

The acquittal portion

1. Summary of the facts charged

As stated in its reasoning, the Defendants conspired to sell and purchase securities with a false or misleading appearance of active trading, and thereby obtain a total of KRW 38.69,114 million.

2. Defendants and defense counsel's assertion

The Defendants purchased the instant 52 issues at the national level of increase in the share price, and there was a lot of defense information around the time of the Defendants’ trading, and there were many cases where the Defendants sold shares even after the Defendants sold the shares, so the entire profit margin gained by the Defendants cannot be deemed to have a causal relationship with the Defendants’ order, and ultimately, it constitutes a case where the “profit accrued from the violation” cannot be calculated.

3. Determination

A. Relevant legal principles

The “profit accrued from a violation” under the proviso of Article 443(1) and (2) of the Financial Investment Services and Capital Markets Act shall be deemed to mean the recognition of causation with the risk arising from the violation among the profits accrued from the transaction related to the violation. In ordinary cases, the difference may be calculated by the method of calculating the gross income from the transaction related to the violation after deducting the total cost for the transaction from the gross income from the total income from the transaction related to the violation. However, if there are circumstances to deem that it is unreasonable to calculate the value of the profit accrued from the violation in a specific case due to the existence of the share price increase due to the change factors caused by the normal share price fluctuation factors in the stock market or by a third party unrelated to the violator, the calculation shall be made separately from the profits that are recognized as the causal relationship with the violation. The burden of proof for such act is borne by the prosecutor (see, e.g., Supreme Court Decisions 2009Do675, Apr. 9, 2009; 2011Do15056, Jul. 113).

In addition, Article 443(1) proviso and Article 443(2) of the Financial Investment Services and Capital Markets Act (amended by Presidential Decree No. 2009Do1374, Jul. 9, 2009) include "profit gained from a violation" as a part of the constituent elements of a crime and increases punishment depending on the value of the crime. Therefore, the principle of balance between crimes and punishment should be applied by strictly and carefully calculating the value of the profit gained from the violation, so as not to undermine the principle of accountability that the crime and punishment should be balanced and proportional to the responsibility (see, e.g., Supreme Court Decision 2009Do1

B. Determination

1) In trading the instant 52 issues, the prosecutor determined that the said amount was profit accrued from the instant manipulation of market price, based on the premise that the Defendants obtained profit margins on a total of KRW 38.69,1140,000 (excluding commission and tax, etc.), and instituted a public prosecution by applying Article 443(2) of the former Capital Markets Act.

2) In full view of the Defendants’ transaction periods and patterns, and the trend of stock price fluctuations, etc. as seen earlier, profit margin derived from the Defendants’ trading of the instant 52 items is the ① price fluctuation formed in the course of issuing an order to purchase a maximum or high-priced price in the regular market on the first trading day when the Defendants’ trading of a specific item was conducted over 2 business days, and the price fluctuation (i.e., the price fluctuation between the next trading day and the previous trading day) formed during the period during which the market price was determined and the Defendants sold stocks were dependent on the share price fluctuation before the Defendants sold the stocks. ② In the event that the Defendants’ trading was conducted over 3 business days, the price fluctuation depends on the price fluctuation between the first trading day and the last trading day after adding the above changes to the previous trading day and the last trading day. Moreover, there was room for other factors such as price fluctuation, excluding the price fluctuation generated in the process of forming the maximum or high-priced price in the regular market.

3) However, according to the evidence submitted to this court, the following circumstances are recognized.

A) At the time of the Defendants’ trading of the instant 52 items, there were a number of information that can be recognized as family members by general investors (No. 3 1-160 of evidence No. 3, No. 4 of evidence No. 1-67 of evidence No. 4 of evidence No. 4) from an objective perspective, such as “the largest X is expected to enter the static System,” and thereby, Q’s stock price increases annually, or Q’s price increases.”

B) In addition, since the above information was disclosed via HTS real-time or reported from time to time in the media in the economic sector, there was no evidence to deem that other investors could easily access the information, and there is no evidence to deem that the Defendants, who are personal investors, were in a position to know the above information prior to other investors.

C) Examining the overall trend of the share price and trading volume of the instant 52 items during the period of the Defendants’ trading, there are many cases where the Defendants were likely to increase the share price and trading volume before commencing each item purchase, and there are many cases where the Defendants continued to increase the total share price on the date of selling the shares purchased by the Defendants and thereafter thereafter.

D) It has been pointed out as a social problem that the 'open investors' in the trading of ‘the 'theme-based investors' before and after the presidential election in 2012 are distorted because the stock market is overheated, and thus the supply and demand is distorted. At that time, the Financial Supervisory Service has announced that it will implement a special control over the teme-based illegal transactions.

4) Comprehensively taking account of the above circumstances, it cannot be readily concluded that the entire profit margin earned by the Defendants in this case had causations with their market price manipulation. Rather, the Defendants’ share price increase in the 52 issues of this case during the trading period is determined to exist in addition to the share price increase caused by the Defendants’ market manipulation, and the share price increase caused by the normal share price fluctuation factors or external factors unrelated to the Defendants’ share market. Therefore, it is reasonable to deduct that part and calculate the profits earned by the Defendants from the share price manipulation.

However, in relation to the above, the prosecutor only submitted the details of the Defendants’ transaction and the profit margins calculated therefrom as evidence, and the evidence submitted by the prosecutor alone is insufficient to separately calculate the Defendants’ profit amount by separating only the part where the risk and causation caused by the instant market price manipulation from among the total profit margins earned by the Defendants. Thus, the instant case constitutes a case where the Defendants cannot calculate the profit amount derived from the Defendants’ market manipulation.

4. Conclusion

Thus, since this part of the facts charged constitutes a case where there is no proof of crime, it should be pronounced not guilty pursuant to the latter part of Article 325 of the Criminal Procedure Act. However, as long as the capital market in the judgment and the crime of violation of the Financial Investment Services and Capital Markets Act are found to be guilty,

The presiding judge, senior judge;

Records of Judges

Judges Kim Jae-hee