[1] In a case where multiple acts falling under Articles 176 and 178 of the Financial Investment Services and Capital Markets Act are continuously repeated for a single and continuous period under the following criminal intent for the purpose of stock price manipulation, etc.: the number of such crimes (=general crime)

[2] The meaning of "interest gained from a violation" under the proviso of Article 443 (1) and Article 443 (2) of the Financial Investment Services and Capital Markets Act, and the method of calculating such profit and the burden of proof (=public prosecutor)

[3] The meaning of "illegal means, plans, or tricks" under Article 178 (1) 1 of the Financial Investment Services and Capital Markets Act

[4] The case affirming the judgment below holding that the defendant's act constitutes a violation of Article 178 (1) 1 and Article 178 (2) of the Financial Investment Services and Capital Markets Act, in case where Eul, an executive officer of Gap corporation, entered into an agreement to guarantee investment return with Eul and allowed Eul to participate in the capital increase with capital increase in the name of foreign corporation Byung

[1] The legal interests protected under Articles 176 and 178 of the Financial Investment Services and Capital Markets Act, which prohibit market price manipulation and unfair trading, are the social legal interests that ensure the fairness and smooth circulation of the transaction of stocks, etc., and individual property interests such as stock holders are not directly protected. Thus, in a case where multiple acts falling under Articles 176 and 178 of the Financial Investment Services and Capital Markets Act are continuously repeated for a certain period under the criminal intent of single and continuous criminal acts for the purpose of stock price manipulation, etc., the single comprehensive crime of violation of the prohibition of market price manipulation and unfair trading under Articles 176 and 178 of the Financial Investment Services and Capital Markets Act is established.

[2] The term “profit from a violation” under the proviso of Article 443(1) and Article 443(2) of the Financial Investment Services and Capital Markets Act refers to the profit from a transaction related to the violation, and the causal relationship is acknowledged. In ordinary cases, the causal relationship can be calculated by calculating the gross income from a transaction related to the violation after deducting the total expenses incurred in trading. However, in cases where there are circumstances to deem that the value of the profit from the violation in a specific case is unreasonable by the aforementioned method, the legislative intent of Article 443 of the Financial Investment Services and Capital Markets Act to eradicate fraudulent unfair trading and the principle of liability, which are the major criminal law, should be taken into account in mind, with the motive, circumstance, form, period, third party intervention, securities market situation, and all other factors that may have a significant impact on the share price, and the burden of proof should be borne by the prosecutor. Furthermore, the principle of strict punishment should be applied to the amount of profit from the violation under the proviso of Article 443(1) and (2) of the Financial Investment Services and Capital Markets Act as part of the criminal liability principle.

[3] Article 178(1)1 of the Financial Investment Services and Capital Markets Act prohibits “act of using unlawful means, schemes, or tricks” in relation to trading and other transactions of financial investment instruments. Here, “unfair means, schemes, or tricks” refers to any means, schemes, or tricks which are recognized as being unfair by social norms.

[4] The case affirming the judgment below holding that the defendant's act constitutes a violation of Article 178 (1) 1 and Article 178 (2) of the Financial Investment Services and Capital Markets Act, in case where the defendant, an executive officer of Gap corporation, entered into an agreement to guarantee investment return with Eul and caused Eul to participate in the capital increase with capital increase in the name of Eul corporation Byung in the name of Eul

[1] Articles 176 and 178 of the Financial Investment Services and Capital Markets Act / [2] Article 443 (1) and (2) of the Financial Investment Services and Capital Markets Act / [3] Article 178 (1) 1 of the Financial Investment Services and Capital Markets Act / [4] Articles 178 (1) 1 and (2), 443 (1) 8 and 9 of the Financial Investment Services and Capital Markets Act

[1] [2] Supreme Court Decision 2009Do675 Decided April 9, 2009 / [1] Supreme Court Decision 2002Do1855 Decided July 26, 2002 (Gong2002Ha, 2159) / [2] Supreme Court Decision 2009Do1374 Decided July 9, 2009 (Gong2009Ha, 1374), Supreme Court Decision 2009Do13890 Decided April 15, 2010 (Gong2010Sang, 954), Supreme Court Decision 2009Do6411 Decided December 9, 2010 (Gong2011Sang, 156)

Defendant 1 and 11 others

Defendant 1 and three others and the Prosecutor

Attorneys Park Jong-chul et al.

Seoul High Court Decision 2010No3160 decided June 9, 2011

All appeals are dismissed.

1. We examine the grounds of appeal as to each violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud, embezzlement, and breach of trust).

Defendant 1 and the Prosecutor’s Grounds of Appeal are examined together.

A. As to the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud)

The intent of the crime of defraudation, which is a subjective constituent element of fraud, shall be determined by comprehensively taking into account the objective circumstances such as the defendant's financial history, environment, details of the crime, and the process of performing transaction before and after the crime, so long as the defendant does not make a confession, the crime of fraud is established even by dolus negligence. The willful negligence as a subjective element of the constituent element of the crime refers to the case where the possibility of occurrence of the crime is expressed as uncertain and it is accepted in the statement. The possibility of occurrence of the crime is recognized as well as the awareness of the possibility of occurrence of the crime. Furthermore, whether the actor permitted the possibility of occurrence of the crime is not dependent on the statement of the offender, but on the basis of the specific circumstances such as the form of the act committed outside and the situation of the act, etc., the possibility of occurrence of the crime should be confirmed from the perspective of the offender (see Supreme Court Decision 2007Do1214, Feb. 26, 2009).

Examining the reasoning of the judgment below in light of the records, although Defendant 1 did not have the intent or ability to fulfill the condition of compensation for losses for investment funds, Defendant 6 made profits of more than 10% per month by investing 50 million won in the shares in around July 23, 2003 through Defendant 6, the court below determined that there was no proof of the crime against the facts charged that Defendant 1 received the securities account in the above victim’s name of the principal and 100 million won by making a false statement that he would make up for the principal and 10% of the principal of the investment even if the investment losses occurred, and that he would receive the securities account in the above victim’s name of the principal and 50 million won as monthly income, and it is just to acknowledge the innocence of the facts charged, contrary to what is alleged in the grounds of appeal.

B. As to the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Partially Recognized Crime: Breach of Trust)

The intent of unlawful acquisition in the crime of embezzlement refers to an intention to dispose of another person's property in violation of his/her duties for the purpose of pursuing his/her own interest or a third person's own interest, such as his/her own property, and even if there is an intention to return, compensate, or compensate for it later, it does not interfere with recognizing the intention of unlawful acquisition (see Supreme Court Decision 2005Do3045, Aug. 19, 2005). Meanwhile, if a director, etc. of a company has already lost his/her ability to repay corporate funds to another person and has lent funds to another person only without reasonable recovery measures such as receiving sufficient collateral, etc., if he/she had already known that it would cause damage to the company, or if he/she has continuously lent funds to another person without reasonable recovery measures, such lending would cause damage to the company, which would result in breach of trust to the company, and even if it merely causes damage to the company's own property (see Supreme Court Decision 2005Do30489, Apr. 29, 2006).

1) As to Defendant 1’s ground of appeal

After compiling the adopted evidence, the court below acknowledged the facts as stated in its holding. (1) An act of withdrawal of funds as stated in the court below [30 million won] No. 22, 23, 25, 26 (1. billion won out of 1.3 billion won), 48 through 50, 65, 67, and 70 (2) an act of occupational embezzlement against Nonindicted Incorporated Company 2; (3) the court below's act of embezzlement as stated in the court below's holding No. 13, 24 (20 million won out of 30 million won), 26 (30 million won out of 1.30 billion won), 30, 39, 53 (200 million won out of 30 million won), 444 (4440 million won out of 30 million won) or 40 million won out of 240 million won out of 300 million won [2] each of the act of embezzlement, 40 million won out of 1, 400000 won [3 days of money lending]

In light of the above legal principles and records, the fact-finding and judgment of the court below are justified and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the act of ex post facto embezzlement, or in deviation from the bounds of the principle of free evaluation of evidence in selecting evidence or finding facts.

2) As to the Prosecutor’s ground of appeal

Examining the reasoning of the judgment below in light of the records, the court below determined that there was no proof of the crime as to the facts charged that Defendant 1 and 2 conspired with them on April 27, 2009, and paid KRW 3.5 billion to Nonindicted Incorporated Company 2, which was in business custody as stated in No. 52 as stated in the court below [Attachment 1] No. 52, and embezzled the funds of Nonindicted Incorporated Company 2, which was in business custody, to be loaned to Nonindicted Incorporated Company 6, and it is just to recognize the acquittal of the above facts charged, and contrary to the allegations in the grounds of appeal, there was no error of law

C. As to the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation)

1) As to Defendant 1’s ground of appeal

Since a final appeal is a follow-up trial on the judgment of the appellate court, matters not subject to a review in the appellate court are not different from the scope of the judgment of the court of final appeal, so it cannot be deemed as the grounds for final appeal for reasons other than those which the defendant did not assert as the grounds for final appeal in the appellate court or which are subject to a review by the appellate court ex officio (see Supreme Court Decision 2006Do8690, Mar. 1

According to the records, Defendant 1 appealed against the judgment of the court of first instance and did not raise any appeal as to the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) within the period for submitting the grounds for appeal. In addition, the judgment of the court of first instance as to the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) cannot be said to have a ground for ex officio examination under the proviso of Article 361-4(1) of the Criminal Procedure Act or a ground for ex officio adjudication under Article 364(2) of the same Act

Therefore, Defendant 1’s ground of appeal on the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) cannot be a legitimate ground of appeal.

2) As to the Prosecutor’s ground of appeal

The prosecutor may add, delete, or modify the facts charged or the applicable provisions of Acts stated in the indictment with the permission of the court within the scope not impairing the identity of the facts charged. The identity of the facts charged is maintained if the social facts, which form the basis of the facts charged, are the same in the basic point of view. In determining the identity of these basic facts, the defendant’s act and the social factual relations shall be based in mind with the function of the identity of such facts, and normative elements shall also be taken into account (see Supreme Court Decision 2009Do9593, Jun. 24, 2010).

According to the records, the court below approved the prosecutor's application for the addition of the facts charged on April 12, 201, but decided to revoke the decision to permit the addition of the facts charged on June 2, 201, on the ground that the facts charged concerning the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) and the facts charged for the addition of the facts charged are not comprehensive crimes but substantive concurrent relations, and thus the identity of the facts charged is not recognized.

In light of the above legal principles and records, the fact-finding and judgment of the court below are justified and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the identity of the facts charged.

2. We examine the misapprehension of legal principles among the grounds of appeal on each violation of the Financial Investment Services and Capital Markets Act.

Defendant 12 and prosecutor's grounds of appeal are examined together.

A. As to the misapprehension of legal principles as to a blanket crime

The legal interests protected under Articles 176 and 178 of the Financial Investment Services and Capital Markets Act that prohibit market price manipulation and unfair trading (hereinafter “Capital Markets Act”) are the social legal interests that ensure the fairness and smooth circulation of the trading of stocks, etc., and individual property interests such as stock owners do not directly protect such legal interests. In a case where multiple acts falling under Articles 176 and 178 of the Capital Markets Act are repeated continuously for a certain period under the single and continuous criminal intent for the purpose of stock price manipulation, etc., the inclusive crime of market price manipulation and unfair trading under Articles 176 and 178 of the Capital Markets Act is established (see Supreme Court Decision 2009Do675, Apr. 9, 2009).

The lower court determined that: (a) of each of the instant violations of the Capital Markets Act, the violation of the said Act was committed on February 2, 2009; and (b) the violation of the said Act (hereinafter “instant crime”); (c) the violation of the said Act (hereinafter “instant crime”); and (d) the violation of the said Act (hereinafter “instant crime”); and (e) the violation of the said Act in the course of the merger between Nonindicted Co. 8 and Nonindicted Co. 9 on October 26, 2009 and Nonindicted Co. 5 on December 29, 2009 (hereinafter “instant crime”); and (c) the violation of the said Act in the course of the merger between Nonindicted Co. 5 and Nonindicted Co. 5 (hereinafter “Nonindicted Co. 3”)

In light of the above legal principles and records, the fact-finding and judgment of the court below are justified and acceptable. Contrary to the allegations in the grounds of appeal as to each of the crimes, there were no errors in the misapprehension of legal principles as to blanket crimes.

B. As to the relationship between Article 178(1)1 and Article 176(2)1 and Article 178(1)2 of the Financial Investment Services and Capital Markets Act

Even if the evaluation of the number of crimes was erroneous, if there is no difference in the scope of punishment, it is difficult to view that there was an error that affected the conclusion of the judgment (see Supreme Court Decision 2002Do7335, Feb. 28, 2003).

The lower court determined that Article 178(1)1 and Article 176(2)1 of the Financial Investment Services and Capital Markets Act are not in compliance with the law (special relation), or that Article 178(1)1 and Article 178(1)2 of the Financial Investment Services and Capital Markets Act are not in compliance with the law (special relation). As seen in the above A., each of the instant crimes constitutes a single comprehensive crime of violation of the Financial Investment Services and Capital Markets Act, and as long as the statutory punishment for a violation of Article 178(1)1 of the Financial Investment Services and Capital Markets Act and the statutory punishment for a violation of Article 176(2)1 and Article 178(1)2 of the Financial Investment Services and Capital Markets Act is identical, the lower court’s aforementioned determination did not affect the conclusion of the judgment.

C. As to the calculation of the profit accrued from the violation

The term “profit from a violation” under the proviso of Article 443(1) and (2) of the Financial Investment Services and Capital Markets Act refers to a profit arising from a transaction related to such violation, which is recognized as the causal relationship. In ordinary cases, the causal relationship may be calculated by calculating the gross income resulting from a transaction related to the violation by deducting the total expenses for such transaction from the total income. However, in a case where there are circumstances to deem that it is unreasonable to recognize the value of the profit derived from a violation in a specific manner as above, the legislative purport of Article 443 of the said Act and the principle of responsibility, which are the major principles of criminal law, to eradicate fraudulent unfair trading, should be taken into account in mind, the causal relationship should be calculated by taking into account the motive, circumstance, mode, period, situation of third parties’ involvement, and all other factors that may have a significant impact on the share price, and the burden of proof should be borne by the prosecutor (see Supreme Court Decision 200Do1374, Jul. 9, 200). 4).

1) As to the calculation of profit from the crime of this case

The lower court determined that: (a) the amount of profit derived from the crime of this case’s violation of the first agreement between Defendant 1 and Nonindicted 10 on November 25, 2008 (hereinafter “the first agreement”) was 700,602,204; (b) Defendant 1 and Nonindicted 10 pursuant to the agreement on guaranteeing investment profits on March 3, 2009 (hereinafter “the second agreement on guaranteeing investment profits”); (c) the amount of profit derived from the crime of this case’s violation of the second agreement on June 4, 2009 was able to be calculated separately from the amount of profit derived from the crime of this case’s violation of the second agreement on June 5, 209; and (d) the amount of profit derived from the second agreement on June 2, 2009, at least the amount of profit generated from the second agreement on June 2, 2009, the lower court determined that Defendant 2 and the second agreement on the second agreement on the use of the second agreement on June 9, 2000.

In light of the above legal principles and records, the fact-finding and judgment of the court below are justified and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the calculation of profit gained from violation.

2) As to the calculation of profit from the crime of this case

A) As to the calculation of the profit from the acquisition of new stocks through a merger of Nonindicted 8 Co., Ltd. without any sale restriction

The lower court determined that the amount of profit from acquiring new stocks through a merger of Nonindicted Co. 8, which did not receive any restriction on sale due to avoidance of compulsory protection, is not the difference between the appraised value of the new stocks through a merger of Nonindicted Co. 8, which was calculated on the basis of the closing price prior to the listing of new stocks through a merger of Nonindicted Co. 8, but the difference between the value of the new stocks through a merger of Nonindicted Co. 8, which was subject to restriction on sale from the value of new stocks through a merger of Nonindicted Co. 8, which was subject to restriction on sale, cannot be calculated on the ground that the value of new stocks through a merger of Nonindicted Co. 8, which was subject to restriction on

Examining the reasoning of the judgment below in light of the aforementioned legal principles, the above determination by the court below is just, and there is no error in the misapprehension of legal principles as to the calculation of profit gained from violation.

B) As to the calculation of profits from market price manipulation in relation to the exercise of appraisal rights

As to the facts charged that Defendant 1 et al. had Nonindicted Co. 8 gain unjust enrichment equivalent to the same amount by getting Nonindicted Co. 8 to avoid losses equivalent to KRW 4,925,697,62 on the ground that the exercise size of appraisal right was decreased through market price manipulation, the lower court determined that the amount of profit accrued from market manipulation in relation to the exercise of appraisal right cannot be calculated on the ground that the actual exercise size of appraisal right was not determined, in light of the fact that the exercise size of appraisal right cannot be deemed to have been determined.

Examining the reasoning of the judgment below in light of the aforementioned legal principles, the above determination by the court below is just and acceptable, and contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the calculation of

3. We examine the remainder of the grounds of appeal as to each violation of the Capital Markets Act.

Defendant 1, 5, 11, and 12 and the Prosecutor’s grounds of appeal are also examined.

A. On February 2, 2009, violation of the Capital Markets Act relating to the allocation of capital increase with consideration to a third party by Nonindicted Co. 2, Ltd.

1) As to Defendant 1’s ground of appeal

The term “purposes of soliciting the sale and purchase” under Article 176(2) of the Financial Investment Services and Capital Markets Act means a transaction that is likely to cause an artificial change in the market price due to artificial manipulation, and thus, is not problematic as to whether the market price exists for other purposes or its main purpose is to attract the sale and purchase of securities by misunderstanding that the market price was formed by the principle of natural demand and supply in the securities market, etc., and the degree of awareness of the purpose is sufficient. Meanwhile, “as the sale and purchase of the securities or exchange-traded derivatives becomes booming the market price,” under Article 176(2)1 of the said Act refers to a transaction that is likely to cause an artificial change in the market price and trading volume to be formed in the free competition market due to normal demand and supply, and where a series of acts have occurred, it is sufficiently possible to determine the market price as a whole due to such acts. In addition, whether each party falls under the scope of the sale and purchase price prior to and after the issuance of securities, etc., 200 motive and trading volume, etc.

After compiling the adopted evidence, the court below acknowledged the facts as stated in its reasoning, and determined that the act of trading in the form of shares by Nonindicted 10 and the act of trading in the form of shares by Defendant 8 constitutes a violation of Article 176(2)1 of the Capital Markets Act.

In light of the above legal principles and records, the fact-finding and judgment of the court below are justified and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors of law by exceeding the bounds of the principle of free evaluation of evidence in selecting evidence or finding facts.

2) As to the Prosecutor’s ground of appeal

According to Article 141(1) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act, a joint holder of stocks, etc. means a person who has agreed to jointly acquire or dispose of stocks, etc., jointly or solely, and mutually transfer or acquire the acquired stocks, etc., and jointly exercise voting rights (including the power to instruct the exercise of voting rights) pursuant to an agreement or an agreement with the principal.

Examining the reasoning of the judgment below in light of the records, the court below determined that there is no proof of the crime against this part of the facts charged on the premise that Defendant 1, Defendant 11, 12, and Nonindicted 10, Defendant 11, Defendant 11’s shares of Nonindicted Company 2, Defendant 3 billion won acquired under Defendant 1’s principal guarantee, Defendant 1’s shares of Nonindicted Company 11, Defendant 1 borrowed from Defendant 12, and Defendant 1’s shares of Nonindicted Company 2 and Nonindicted 10 purchased under the name of Defendant 11 pursuant to the agreement on the guarantee of investment profits of both 1 and 2 are jointly held, and it is just to acknowledge the acquittal of the above facts charged. Contrary to the allegations in the grounds of appeal, the court below did not err by exceeding the bounds of the principle of free evaluation of evidence in the selection of evidence or the recognition of facts,

B. As to the violation of the Capital Markets Act through the third guarantee agreement on investment return with Nonindicted Corporation 7

1) As to Defendant 1’s ground of appeal

After compiling the adopted evidence, the court below acknowledged the facts as stated in its holding, and determined that Defendant 1’s act of forcing Nonindicted 10 to purchase the shares of Nonindicted Company 8 through the third investment profit guarantee agreement constitutes a violation of Article 176(2)1 of the Capital Markets Act.

In light of the above legal principles and records, the fact-finding and judgment of the court below are justified and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors of law by exceeding the bounds of the principle of free evaluation of evidence in selecting evidence or finding facts.

2) As to the Prosecutor’s ground of appeal

Article 178(1)1 of the Financial Investment Services and Capital Markets Act prohibits “act of using unfair means, schemes, or tricks” in relation to trading and other transactions of financial investment instruments. Here, “unfair means, schemes, or tricks” refers to any means, schemes, or tricks that are deemed unfair by social norms.

Examining the reasoning of the judgment below in light of the records, the court below determined that there is no proof of crime against the facts charged that Defendant 1’s act of having Defendant 1 purchase the shares of Nonindicted Co. 10 through the third-party investment profit guarantee agreement constitutes a violation of Articles 176(2)1 and 178(1)1 of the Capital Markets Act, and it is just to acknowledge the acquittal of the above facts charged. Contrary to the allegations in the grounds of appeal, the court below did not err by exceeding the bounds of the principle of free evaluation of evidence in the selection of evidence or the recognition of facts, or by misapprehending the legal principles as to the unjust trick under Article 178(1)1 of the Capital Markets Act.

C. On May 20, 2009, as to the violation of the Financial Investment Services and Capital Markets Act with respect to the offering of new shares by Nonindicted Co. 4

1) As to Defendant 1’s ground of appeal

Article 178(2) of the Financial Investment Services and Capital Markets Act prohibits “disseminating a rumor, using a deceptive scheme, assault, or threat” for the purpose of trading or any other transaction of financial investment instruments or promoting a fluctuation in the market price. Here, the term “debrising scheme” refers to means, plans, tricks, etc. to induce a certain act by deceiving a trading partner or an unspecified investor, and the term “debrising network” refers to deceiving another person by means of deceptioning any false fact different from objective facts (see Supreme Court Decision 2009Do6411, Dec. 9, 2010).

After compiling the adopted evidence, the court below acknowledged the facts as stated in its holding, and determined that Defendant 1’s act of having Nonindicted 10 participate in the capital increase with the name of Nonindicted 7 corporation, a foreign corporation, in the name of Nonindicted 4 corporation, after concluding an agreement on guaranteeing investment returns with Nonindicted 10 on May 20, 209, constitutes a violation of Article 178(1)1 and Article 178(2) of the Capital Markets Act.

In light of the above legal principles and records, the fact-finding and judgment of the court below are justified and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to fraudulent means under Article 178 (1) 1 of the Capital Markets Act or fraudulent means under Article 178 (2) of the Capital Markets Act.

2) As to the Prosecutor’s ground of appeal

Examining the reasoning of the judgment below in light of the records, the court below determined that there was no proof of the crime as to this part of the charges under the premise that Defendant 1 and Nonindicted Co. 7 jointly hold shares acquired through the offering of new shares by Nonindicted Co. 4 and the shares acquired by Nonindicted Co. 7, as stated in its reasoning, and it is just to recognize the innocence of the above charges. Contrary to the allegations in the grounds of appeal, the court below did not err by exceeding the bounds of the free evaluation of evidence in

D. On June 15, 2009, violation of the Capital Markets Act relating to the acquisition of forfeited stocks for the allocation of forfeited stocks to the shareholders of Nonindicted Co. 8, Ltd.

The term “material fact” under Article 178(1)2 of the Financial Investment Services and Capital Markets Act means a fact that is identical to the “material nonpublic information” under Article 174(1) of the same Act, which is a prohibition clause prohibiting the use of material nonpublic information, and that may have a significant impact on the property and management of the pertinent corporation, or on the investment judgment of investors as necessary for fair trade in specific securities, etc. and the protection of investors (see Supreme Court Decision 2009Do1374, Jul. 9, 2009).

Examining the reasoning of the judgment below in light of the records, it is difficult for the court below to find out, on the grounds stated in its reasoning, that Defendant 1’s 253,532,630 won borrowed from Defendant 12 and 200 million won of his own money were acquired on Defendant 1’s account with Nonindicted Incorporated Company 8, 115,93 shares forfeited for the issuance of new shares with 12,000 won, but Defendant 1 submitted the performance report on June 16, 2009, 253,532,630 won was indicated as if the shares were paid normally, and it was difficult for Nonindicted Incorporated Company 8 to select the status of shares as its officers, and to find that there was no error in the misapprehension of legal principles or misunderstanding of legal principles as to “the above 115,93 shares forfeited for the issuance of new shares with 12,000 won or 300 million won, and thus, it did not constitute an unlawful act under Article 17(1)18(1) of the Financial Investment Services and Capital Markets Act.

E. On August 12, 2009, violation of the Financial Investment Services and Capital Markets Act relating to the acquisition of borrowed name shares with respect to the forfeited stocks to be distributed to Nonindicted 40,000 shares issued by stockholders

Examining the reasoning of the judgment below in light of the records, it is difficult to view that Defendant 1’s act constitutes “an act of using a document stating or indicating important matters necessary to avoid misunderstanding of others” under Article 178(1)1 of the Capital Markets Act or “an act of using a document stating or indicating important matters necessary to avoid misunderstanding of others” under Article 178(1)2 of the same Act, and therefore, it is reasonable to find Defendant 1 not guilty of the facts charged on the ground that Defendant 1’s act constitutes “an act of using a document stating or indicating important matters necessary to avoid misunderstanding of others.” Defendant 1 submitted a report on the status of stocks held in the name of Nonindicted Co. 4 Co. 2 on August 14, 2009 when submitting the report on the status of stocks held in bulk, etc. under the name of Nonindicted Co. 2 Co. 2, Ltd., and thus, Defendant 1 did not err in the misapprehension of legal principles as to the selection of evidence or the recognition of the limit of free evaluation of evidence.

F. As to the violation of the Capital Markets Act relating to the exercise of borrowed name equivalent to KRW 2.2 billion on July 13, 2009 by Nonindicted Co. 8’s preemptive right to new stocks

Examining the reasoning of the judgment below in light of the records, the court below determined that there was no proof of the crime as to this part of the facts charged under the premise that Defendant 1, Nonindicted 14, and Defendant 12 jointly own the shares allocated by paying the exercise fund of preemptive rights to Nonindicted 8 under the name of himself and Nonindicted 15, and that there was no proof of the crime, and it is just to recognize the innocence of the above facts charged. Contrary to the allegations in the grounds of appeal, the court below did not err by exceeding the bounds of the principle of free evaluation of evidence or by misapprehending the legal principles as to joint holders

G. As to the violation of the Capital Markets Act in the course of the merger between Nonindicted Co. 8 and Nonindicted Co. 9 on October 26, 2009

Article 30 of the Criminal Act provides that two or more persons jointly commit a crime. In order to establish a joint principal offender, it is necessary to implement a crime through functional control based on the intention of joint processing and objective requirements. Here, the intention of joint processing is insufficient to recognize another person’s crime and not to restrain it, and to allow another person’s criminal intent to commit a specific criminal act with joint intent, and to shift one’s own intention to practice using another person’s act (see Supreme Court Decision 2002Do747, Mar. 28, 2003). Meanwhile, aiding and abetting under the Criminal Act refers to all direct and indirect acts that facilitate the principal offender’s criminal act while being aware of the fact that it constitutes a crime. Aid and abetting under the Criminal Act refers to one’s own act that facilitates the principal offender’s criminal act, and such aiding and abetting is established not only when aiding and abetting the principal offender’s act during the commission of the crime, but also when aiding and abetting the criminal defendant’s act that is reasonably related to the principal offender’s act of aiding and abetting and abetting and abetting the crime.

After compiling the adopted evidence, the court below acknowledged the facts as stated in its holding, and determined that Defendant 12 constitutes a aiding and abetting offender, not a joint principal offender with regard to Defendant 1, etc., even though Defendant 1 et al. knew that Defendant 1 et al. will take over Nonindicted Company 9 in the name of tea to avoid compulsory protection, provided funds and borrowed name for the crime, thereby facilitating Defendant 1 et al.’s crime and making it difficult to view that Defendant 1 et al. committed a crime through functional control based on joint intent.

In light of the above legal principles and records, the fact-finding and judgment of the court below are justified and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to co-principal or aiding and abetting.

H. As to the violation of the Capital Markets Act in the course of the merger between Nonindicted Co. 8 and Nonindicted Co. 5 on December 29, 2009

1) As to Defendant 5’s grounds of appeal and the grounds of appeal by the prosecutor against the above Defendant

After compiling the adopted evidence, the court below acknowledged the facts as stated in its reasoning. Defendant 5 introduced Defendant 1 to borrow KRW 400 million from Nonindicted 16, but did not directly lend KRW 400 million, and thus, it does not constitute a co-principal for Defendant 1, etc.'s crime. However, Defendant 5 knew that Defendant 1, etc. participated in the capital increase with capital increase with consideration to Defendant 5 in the name of Nonindicted 16, while recognizing the circumstances that Defendant 1, etc. would participate in the crime in order to avoid compulsory protection, the court below held that Defendant 1 was an aiding and abetting crime for Defendant 1, etc., by actively participating in the lending process of Nonindicted 16.

In light of the above legal principles and records, the fact-finding and judgment of the court below are justified and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to co-principal or aiding and abetting, by exceeding the bounds of the principle of free evaluation of evidence in selecting evidence or recognizing facts.

2) As to the grounds of appeal by Defendants 11 and 12 and the grounds of appeal by the prosecutor against the above Defendants and Defendant 4

After compiling the adopted evidence, the court below acknowledged the facts as stated in its holding, and found it difficult to view that Defendant 4, 11, and 12 provided funds and borrowed name to be used for the crime while recognizing Defendant 1 et al. to participate in the capital increase with capital in the name of Nonindicted Co. 5 in order to avoid compulsory protection, and Defendant 1 et al., thereby facilitating the crime by Defendant 1 et al., thereby committing a crime through a functional control based on a joint intent, and determined that Defendant 4, 11, and 12 constituted an aiding and abetting criminal, not a joint principal offender for the crime by Defendant 1 et al

In light of the above legal principles and records, the fact-finding and judgment of the court below are justified and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to co-principal or aiding and abetting.

3) As to the grounds of appeal by the prosecutor against Defendant 3 and 6

Examining the reasoning of the judgment below in light of the records, the court below is justified in finding that there was no evidence of crime as to the facts charged that Defendant 1 et al. conspired and participated in the crime of Defendant 1 et al. by providing the funds and borrowed name to Defendant 5 et al., even though Defendant 3 et al. was aware that Defendant 1 et al. participated in the capital increase in order to avoid compulsory protection, and therefore, it did not err by exceeding the bounds of the principle of free evaluation of evidence in selecting evidence or finding facts, contrary to what is alleged in the grounds of appeal.

4. Defendant 2 and the Prosecutor’s grounds of appeal are also examined.

A. As to the ground of appeal on Defendant 2’s sentencing

According to Article 383 subparag. 4 of the Criminal Procedure Act, only in cases where death penalty, life imprisonment, or imprisonment or imprisonment without prison labor for not less than ten years has been imposed, an appeal on the ground of unfair sentencing is allowed. Thus, in this case where Defendant 2 was sentenced to a minor sentence, the argument that the amount of punishment is unreasonable cannot be a legitimate ground for

B. As to the ground of appeal by the prosecutor on sentencing

Article 383 subparag. 4 of the Criminal Procedure Act provides that a prosecutor shall not claim as the grounds for appeal that the determination of the original court's punishment is light or that there is an error in violation of the rules of evidence in the original court's recognition of the facts premised on the sentencing against the interests of the defendant (see Supreme Court Decision 2005Do1952 delivered on September 15, 2005).

The prosecutor's assertion that the court below's explanation of the reason for sentencing was erroneous against Defendant 1 cannot be a legitimate ground for appeal.

5. Conclusion

Therefore, all appeals are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Si-hwan (Presiding Justice)