In case where a purchaser of securities claims compensation for damages caused by false statements in a business report against a stock-listed corporation, etc., the burden of proving the existence of causation between false statements in a business report and the occurrence of damages (=stock-listed corporation

In case where a purchaser of securities claims compensation for damages from a stock-listed corporation pursuant to Article 14 of the former Securities and Exchange Act which is applied mutatis mutandis by Article 186-5 of the same Act (amended by Act No. 6176 of Jan. 21, 2000), the purchaser of securities is not required to prove the existence of causation between the false entry of the business report and the occurrence of damages pursuant to Article 15 (2) of the same Act, and the absence of such causation must be proven in order to exempt the stock-listed corporation from liability.

Articles 14, 15(2), and 186-5 of the former Securities and Exchange Act (amended by Act No. 6176 of January 21, 2001); Article 288 of the Civil Procedure Act

Plaintiff

Suwon Electronic Co., Ltd. (Law Firm Mail, Attorneys Ji-hun et al., Counsel for the plaintiff-appellant)

Seoul District Court Decision 2002Na20 delivered on May 30, 2002

The appeal is dismissed. The costs of appeal are assessed against the defendant.

1. According to the reasoning of the judgment below, the court below acknowledged the facts based on the employment evidence, and determined that the defendant is liable to compensate the plaintiff for damages equivalent to 21,528,000 won (=57,447,000 - 35,919,000 - 35,919,000 won on August 17, 1999, after purchasing 11,700 shares of the issuance of the defendant on August 17, 1999, which was after the business report was submitted on August 17, 1998, since the defendant purchased 11,70 shares of the issuance of the defendant on August 35, 23, 199, and sold 19,000 shares for damages, barring any special circumstances.

In light of the records, we affirm the above fact-finding and judgment of the court below as just, and there is no error of finding facts in violation of the rules of evidence and failing to exhaust all necessary deliberations, or in violation of the principle of pleading, party principle, or disposition right, as alleged in the grounds of appeal.

2. In case where a purchaser of securities claims compensation for damages caused by a false entry in a business report, etc. against a stock-listed corporation pursuant to Article 14 of the Act applied mutatis mutandis by Article 186-5 of the former Securities and Exchange Act (amended by Act No. 6176 of Jan. 21, 2000; hereinafter referred to as the "Act"), the purchaser of securities shall not be required to prove the existence of causation between a false entry in a business report and the occurrence of damages pursuant to Article 15(2) of the Act, and shall prove the absence of such causation in order to exempt the stock-listed corporation from liability.

According to the reasoning of the judgment of the court below, the court below rejected the defendant's assertion that there is no causation with the preparation and submission of a business report based on the window dressing accounting, and there is no evidence to acknowledge it. Rather, in the stock transaction, one of the most important factors for the company's financial status and the business report stating financial matters based on the financial statements of the company revealing accurate financial status of the company, which is one of the most objective material for the company to form the share price, and has a decisive effect on the formation of its share price. Thus, a general investor making stock investment has a legitimate preparation and submission of a business report indicating the financial status of the company in question, and the company's share investment has a significant impact on the company's share price formation. Thus, the court below rejected the defendant's argument that the company's above losses should be deemed to have traded the shares of the company under the premise that the company's business report indicating the financial status of the company in question was duly prepared and submitted, and the share price was formed based on its belief and the share price was formed. In light

3. Therefore, the appeal is dismissed, and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Song Jin-hun (Presiding Justice)