[1] The meaning of a deceptive scheme under Article 188-4 (4) 1 of the former Securities and Exchange Act prohibiting unfair trade practices through deceptive means

[2] The case holding that the court below erred by misapprehending the legal principles on the defendants' violation of the former Securities and Exchange Act, where the defendants Gap and Eul purchased Byung's shares in the name of foreign corporation Byung's account or acquired Byung's shares by participating in the third party's allocation of shares with the name of foreign Puercom, and used the fraudulent means to meet the appearance of attracting foreign institutional investors or a large number of foreign investment funds, on the facts of violation of the former Securities and Exchange Act

[3] Whether the media that cause misunderstanding is limited to "documents" under Article 188-4 (4) 2 of the former Securities and Exchange Act prohibiting unfair trade practices using false or fraudulent display documents (affirmative)

[4] In a case where the Defendants were indicted on charges of inducing misunderstandings as to the use of documents by failing to report stocks held in bulk and a change in stock holding status, the case holding that the judgment below which found the Defendants guilty of the charges of fraudulent transaction by misunderstanding the legal principles, even though the above act cannot be deemed as pertaining to “use of documents”, was erroneous in the misapprehension of legal principles

[5] Whether the “profit accrued from a violation” under Articles 207-2 and 214 of the former Securities and Exchange Act includes the benefit accrued to the accomplice (affirmative), and the method of calculating the profit and the burden of proof (=public prosecutor)

[6] Whether a “person who actually owns stocks” has a duty to report on the status of holding stocks and changes in stocks held in bulk (affirmative)

[1] Article 188-4 (4) 1 of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635 of Aug. 3, 2007) prohibits “the act of spreading intentionally the false market price or false facts or other rumor or using a deceptive scheme to gain unjust profits” in relation to the sale and purchase or other transaction of securities. Here, the term “defensive scheme” refers to the means, scheme, trick, etc. for the purpose of inducing certain acts by deceiving trading partners or unspecified investors, and the term “net” refers to the act of deceiving others by means of deceiving false facts different from objective facts.

[2] As to the violation of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635, Aug. 3, 2007), the case holding that the judgment below erred by misapprehending the legal principles as to the defendants' fraudulent act of purchasing the shares of Byung company in the stock market using the name of foreign corporation or account in which the foreign corporation Eul purchased the shares of Byung company in the name of the foreign corporation, or acquired the shares of Byung company by participating in the name of foreign Pacom, which owned the third party's shares with capital increase, on the ground that the foreign corporation Eul's purchase of shares in the stock market using the name of the foreign corporation or account in which the foreign corporation Eul used its own funds and it cannot be viewed as a fraudulent act because there is no falsity since the defendants' purchase of the shares of Byung company in the stock market by using the name of the foreign corporation or account in which the foreign corporation was actually listed, and there is no special reason to believe that the above fraudulent act constitutes a fraudulent act as above.

[3] Article 188-4 (4) 2 of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635 of Aug. 3, 2007) prohibits “an act of inducing others to obtain money or other benefits by inducing misunderstanding of material facts or by using a document in which any necessary fact is omitted,” in relation to the sale and purchase or other transaction of securities. This is a punishment for an act of inducing others to obtain pecuniary benefits by using false or fraudulent documents with regard to material facts that affect investors’ investment decisions, and the media of such act are limited to documents, and thus, the requirement of “use of documents” must be satisfied in order to constitute a violation of subparagraph 2.

[4] In a case where Defendant A and B were indicted on charges of causing misunderstandings as to the use of documents by trading stocks of Byung company in the name of a foreign corporation, and not reporting stocks held in bulk and reporting changes in stock holdings, the case holding that the court below erred by misapprehending the legal principles in finding guilty of fraudulent fraudulent transactions by misunderstanding the facts charged on the ground that the above acts cannot be deemed as pertaining to the use of documents, and thus, it does not constitute a fraudulent unfair trading under Article 210 subparagraph 5-2 of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635 of Aug. 3, 2007) even if it constitutes a violation of Article 210 subparagraph 5-2 of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act)

[5] The term “profit accrued from a violation” under Articles 207-2 and 214 of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635 of Aug. 3, 2007) refers to the profit acknowledged as a causal relationship with the risk of the violation, and includes the profit accrued to the accomplice. In ordinary cases, the causal relationship can be calculated by calculating the gross income from the transaction related to the violation after deducting the total expenses for the transaction from the gross income. However, in cases where there are circumstances to deem that it is unreasonable to recognize the value of the profit accrued from the specific case by the above method, the burden of proof shall be borne by the prosecutor, taking into account the legislative intent and the principle of responsibility, which are the major principle of criminal law, to eradicate the fraudulent illegal transaction.

[6] A person who actually owns a company’s stocks on his/her own account is obligated to report the status of holding stocks and changes in the status of holding stocks regardless of the name thereof.

[1] Article 18-4 (4) 1 of the former Securities and Exchange Act (amended by Act No. 8635, Aug. 3, 2007; Article 2 of the Addenda of the Financial Investment Services and Capital Markets Act; Article 178 (1) 1 and (2) of the current Financial Investment Services and Capital Markets Act) / [2] Article 188-4 (4) 1 of the former Securities and Exchange Act (amended by Act No. 8635, Aug. 3, 2007; Article 28 (1) 1 and (2) of the current Financial Investment Services and Capital Markets Act; Article 207-2 (1) 2 and (2) 1 of the current Financial Investment Services and Capital Markets Act (see Article 40 of the Financial Investment Services and Capital Markets Act; Article 47 (2) 8 of the current Financial Investment Services and Capital Markets Act; Article 28-4 of the former Financial Investment Services and Capital Markets Act) / [3] Article 88-4 (2 of the former Financial Investment Services and Capital Markets Act

[1] [3] Supreme Court Decision 200Do444 Decided January 19, 2001 (Gong2001Sang, 578) Supreme Court Decision 2002Do1696 Decided July 22, 2002 (Gong2002Ha, 2100) / [1] Supreme Court Decision 2007Do1145 Decided May 15, 2008 / [3/5] Supreme Court Decision 2009Do1374 Decided July 9, 2009 (Gong209Ha, 1374) / [3] Supreme Court Decision 2005Do8652 Decided February 9, 2006; Supreme Court Decision 2003Do6549 Decided April 14, 2006 / [3] Supreme Court Decision 2005Do6549 Decided April 26, 2005

Defendant 1 and three others

Defendant 1 and one other and the prosecutor

Law Firm Barun et al.

Seoul High Court Decision 2009No355 decided June 17, 2009

Of the judgment of the court below, the guilty part against Defendant 1 and 4 and the creation of funds for acquiring stocks by Defendant 1 are all reversed, and the part of the case is remanded to Seoul High Court. The Prosecutor’s remaining appeals against Defendant 1 and 4 and appeals against Defendant 2 and 3 are dismissed.

Defendant 1 and 4 and prosecutor’s grounds of appeal are examined together (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to Defendant 1’s violation of the Act on the Aggravated Punishment, etc. of Specific Crimes

The court below found Defendant 1 guilty of the facts charged, on the grounds that Nonindicted 1 did not make a concrete and consistent statement on the grounds that the funds in its judgment were remitted to the overseas corporation account of Defendant 1 in the course of conducting an investigation several times in relation to this part of the facts charged. After that, Nonindicted 1 appeared as a witness of the first instance court and testified, Nonindicted 1 made a statement that corresponds to this part of the facts charged only after having exchanged with the prosecutor's opinion with the prosecutor's office. After that, Nonindicted 1 made the previous statement at the prosecutor's office that conforms to this part of the facts charged only to the certain framework set forth by the prosecutor's office. After that, Nonindicted 1 made the second testimony at the first instance court through the process of departure and re-entry due to the measure to cancel the prohibition of departure without delay, and made a statement with the same contents as the previous statement at the prosecutor's office consistent with this part of the facts charged, and it did not conform to this part of the facts charged, and there is no evidence to acknowledge credibility or credibility of the prosecutor's office's statement and the first instance judgment.

Examining the relevant evidence in light of the records, the above determination by the court below is acceptable as a reasonable free evaluation of evidence by the judge of the fact-finding court. Contrary to the prosecutor’s grounds of appeal, there is no violation of the principle of free evaluation of evidence against logical and empirical rules

The Prosecutor’s ground of appeal on this part is without merit.

2. As to Defendant 1, 2, and 3's violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation)

Even in cases of stocks issued by a corporation which is not listed on the securities market or the KOSDAQ market, if there is an example of normal transactions that properly reflects the objective exchange value, the price of the stocks shall be deemed the market price and evaluated the value of the stocks. Meanwhile, the method of assessing unlisted stocks under Article 54 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act is merely a supplementary method of assessment, and it cannot be immediately deemed that the assessed value of the stocks is the value of the stocks. Furthermore, even if there is no example of ordinary transactions, it cannot be readily concluded that any one method of assessment should be applied at all times. It shall be determined reasonably by comprehensively taking into account the circumstances of the relevant unlisted corporation and the trading parties at the time of the transaction, the characteristics of the relevant business type, etc. (see Supreme Court en banc Decision 200Do3191, Sep. 28, 2001; Supreme Court Decision 2005Do856, Apr. 29, 2005; Supreme Court Decision 2004Do5742, Mar. 15, 2007).

In light of the fact that the actual trading volume is not properly revealed due to the trading characteristics of unlisted stocks, the share price of the relevant item offered at each of the instant items operated separately, and that the share price offered at the Internet information provision site of this case does not seem to have been distorted due to the parties’ collusion or manipulation, etc., the lower court affirmed the judgment of the first instance court as to the facts charged by the Defendants, as it is, on the ground that even if the trading volume objectively revealed, the instant treatment information system on the Internet information provision site (hereinafter “stock company”) can be seen as a normal business practice that reflects the objective exchange value of stocks, in light of the stock price trend before and after the issuance of the instant convertible bonds, it is reasonable to view that the appropriate share price at the time of the issuance of the instant convertible bonds is 5,000 won or 6,000 won per share, and furthermore, considering the issue conditions of convertible bonds or the feasibility of the treatment information system, etc., the conversion price of convertible bonds at the time of the issuance of the instant convertible bonds cannot be deemed to have been significantly low.

Examining the relevant evidence in light of the aforementioned legal principles and records, the court below’s above fact-finding and determination is just and acceptable. Contrary to the prosecutor’s grounds of appeal, there were no errors by misapprehending the legal principles regarding the method of appraisal of unlisted stocks, or by misapprehending the facts contrary to logical and empirical rules

The Prosecutor’s ground of appeal on this part is without merit.

3. As to Defendant 1’s evasion of compulsory execution

Article 253(3) of the Criminal Procedure Act provides that "the statute of limitations shall be suspended during the period when the offender stays abroad for the purpose of escaping criminal punishment." The legislative purport of the above provision is to properly realize the penal authority by preventing the statute of limitations from proceeding during the period of stay in a foreign country where the offender stays abroad for the purpose of escaping criminal punishment. Thus, the "purpose of escaping criminal punishment" stipulated in the above provision is not limited to the only purpose of staying in a foreign country, but is included in several purposes of staying in a foreign country. If the offender's staying in a foreign country was a tool to escape criminal punishment, "the purpose of escaping criminal punishment" is "the purpose of escaping criminal punishment". The above "the purpose of escaping criminal punishment" is to continuously maintain the application of criminal punishment during the period of stay in a foreign country unless there are objective circumstances where the offender clearly expresses his/her subjective intent that cannot be compatible with "the purpose of escaping criminal punishment", and the aforementioned situation does not affect the application of criminal punishment to the foreigner during the period of stay in Korea (see, e.g., Supreme Court Decision 2005Do42079.

The court below found Defendant 1 guilty of this part of the facts charged with concealing the actual share certificates of the treatment information system stocks in its holding with a view to evading the compulsory execution of the reorganization information corporation, on the grounds that the adopted evidence was comprehensively admitted, and found that Defendant 1 was departing from the Republic of Korea for the purpose of evading criminal punishment on January 25, 2003, since the statute of limitations for the crime of this case was suspended from around that time until March 7, 2008, the day before the above Defendant’s entry into the Republic of Korea, since it was acknowledged that Defendant 1 could be subject to investigation on his own act on January 25, 2003.

Examining the reasoning of the lower judgment and the evidence adopted by the lower court in light of the aforementioned legal doctrine, the lower court’s aforementioned fact-finding and determination is justifiable. In so doing, contrary to what is alleged in the grounds of appeal by Defendant 1, there were no errors by misapprehending the legal doctrine regarding the suspension of statute of limitations, or by misapprehending the facts in violation of logical and empirical rules

Defendant 1’s ground of appeal on this part is without merit.

4. As to Defendant 4’s violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation of Trust)

The purpose of the crime of breach of trust is to inflict loss on the principal’s property by an act in violation of one’s duty. In this case, “an act in violation of one’s duty” includes any act in violation of one’s fiduciary relationship with the principal by failing to perform an act that should have to be expected as a matter of course under the provisions of statutes, the terms of a contract, or the good faith principle, or by performing an act that must not be naturally, (see Supreme Court Decision 2008Do522, Feb. 26, 2009). A beneficiary who gains profit from the execution of the crime of breach of trust or a third party closely related thereto may be recognized as co-principal with the executor in cases where an act of breach of trust has been actively involved in the act of breach of trust or by participating in the entire process of breach of trust (see Supreme Court Decisions 2003Do4382, Oct. 30, 203; 2008Do20874, Jul. 24, 2008). 207.

The court below found Defendant 4 guilty of this part of the facts charged on the ground that Defendant 4 had a risk of damage to the total amount of borrowed money at the time of borrowing funds in its holding on the ground that it should be deemed that Defendant 4 had a risk of damage to the entire amount of borrowed funds at the time of borrowing funds, in collusion with the management of the company in its holding, caused a large amount of company funds to be borrowed by borrowing large corporate funds as a collateral and thereby, caused property damage to the board which was committed by Defendant 4 in collusion with the management of the company in question.

Examining the reasoning of the judgment below and its adopted evidence in light of the aforementioned legal principles, the above fact-finding and judgment of the court below are just and acceptable. Contrary to Defendant 4’s grounds of appeal, there were no errors by misapprehending the legal principles regarding the meaning of damages as stated in the crime of breach of trust, or by misapprehending the facts in violation

Defendant 4’s ground of appeal on this part is without merit.

5. As to Defendant 1 and 4’s violation of the prohibition of unfair trading under Articles 207-2 and 188-4 of the former Securities and Exchange Act

A. As to the inducement of market price decline

(1) Relevant legal principles

The term "purposes 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 enforced Feb. 4, 2009; hereinafter "the former Securities and Exchange Act") means artificially manipulating the market price so as to cause a fluctuation in the market price, and it is not a matter of whether it exists for other purposes or its main purpose with an intention to attract investors to trade securities, and there is also an incomplete perception of the purpose. In addition, it is sufficient that there is a possibility that there is a change in the market price and trading volume in the free competition market according to the normal demand and supply of securities, and there is no possibility that there is a change in the market price due to an artificial act of 104.16.4 billion won and there is no possibility that there is a change in the market price (see, e.g., Supreme Court Decision 200. 201. 94. 4.).

(2) The part on Defendant 4

Based on the fact that Defendant 4 promised to preserve the difference to Nonindicted 2 and 3, the existing shareholders of the instant media chain, and ordered Defendant 4 to sell the instant media chain shares by lowering the price in the future, in fact, due to Nonindicted 2 and 3’s sales orders, etc., the media chain owner has fallen at the level as indicated in its holding, and Nonindicted 4, who proposed a specific receipt plan of the media chain, made a statement corresponding to the facts charged, the lower court determined that it was reasonable to view that Defendant 4 had an intention to reduce the market price in order to determine the lower price of the new shares issued to Defendant 4, and that this was the same even if Defendant 4 had the purpose of securing Nonindicted 2 and 3’s shares.

Examining the reasoning of the judgment below and its adopted evidence in light of the aforementioned legal principles, the court below’s finding this part of the violation is just and acceptable. Contrary to Defendant 4’s allegation in the grounds of appeal, there were no errors by misapprehending the legal principles on the constituent elements of crime, such as purpose or intent, or by misapprehending the legal principles on logic and experience.

(3) The part on Defendant 1

On the other hand, the court below affirmed the judgment of the court of first instance that acquitted Defendant 1 on this part of the facts charged that Defendant 1 conspired with Defendant 4 for the manipulation of market price in collusion, on the ground that there is no evidence to support the fact that Defendant 1 knew or anticipated Defendant 4’s act of inducing market price reduction, but caused Defendant 1 to use funds and accounts.

Examining the relevant evidence in light of the records, the above determination by the court below is acceptable in accordance with the reasonable free evaluation of judges of the fact-finding court. Contrary to the prosecutor’s grounds of appeal, there were no errors by misapprehending the legal principles regarding the requirements for establishment of a joint principal offender, or by misapprehending the facts contrary to logical

B. As to the conspiracy of trading

(1) Relevant legal principles

Article 188-4 (1) of the former Securities and Exchange Act provides that "the purpose of causing a misunderstanding of the fact that the transaction is active or that another person misleads the other person to make a wrong judgment" is to make the investors mistake that the transaction has a natural transaction on the securities market even though the transaction was conducted through an artificial collusion. This purpose is not to question whether the transaction exists with other purpose or its main purpose is, but to what extent the perception of the purpose is sufficient with domination, and whether the transaction actually causes a misunderstanding of investors, etc. (see Supreme Court Decisions 2002Do1696, Jul. 22, 2002; 2004Do1164, Nov. 10, 2005, etc.).

(2) The part on Defendant 4

The lower court determined that Defendant 4 had the purpose of having ordinary investors make a false judgment as if there had been natural transactions of foreign investors, on the ground that Defendant 4 ordered Nonindicted 5, an administrator of Defendant 1, to issue a purchase order under the name of crydices, and had Defendant 5, an administrator of Defendant 1, caused the sale and purchase order. However, the first instance court decided that Defendant 4 had the intention to have the ordinary investors make a false judgment, on the basis of the following: (a) Defendant 4 had the intention to make a false judgment as if there had been natural transactions of foreign investors.

Examining the evidence adopted by the court below in light of the aforementioned legal principles, it is just that the court below found that there was an intention to mislead Defendant 4 into believing that the above transaction had been conducted through a natural transaction. However, in light of the following: (a) the circumstance leading to the negotiation of this case; and (b) information about a transaction entity that purchased shares through a foreign securities company counter does not provide for ordinary investors, the part of the court below's explanation is inappropriate as it found guilty, including "the purpose of misleading global investment banks' investment in the process of the merger and acquisition of media chain" by citing the criminal facts of the court of first instance, as stated in the court below's finding that "the purpose was to mislead as if it had induced global investment banks' investment in the process of the merger and acquisition of media chain" was not appropriate; (b) however, it is just in the conclusion that the above conspiracy of the court below acknowledged the

(3) The part on Defendant 1

On the other hand, the court below affirmed the judgment of the court of first instance which acquitted Defendant 1 of this part of the facts charged that Defendant 1 conspired with Defendant 4 and conspired with Defendant 4, on the ground that there is no evidence to support the fact that Defendant 1 knew or predicted the act of the conspiracy with Defendant 4, but allowed him to use funds and accounts.

Examining the relevant evidence in light of the records, the above determination by the court below is acceptable in accordance with the reasonable free evaluation of judges of the fact-finding court. Contrary to the prosecutor’s grounds of appeal, there were no errors by misapprehending the legal principles regarding the requirements for establishment of a joint principal offender, or by misapprehending the facts contrary to logical

C. As to fraudulent fraudulent transactions

(1) As to the misunderstanding caused by false disclosure of the details of raising funds for stock acquisition

(A) The part on Defendant 4

The lower court determined as follows: (a) it is clear in light of the empirical rule that Defendant 4’s disclosure of the acquisition fund for stocks and bonds with warrants by a major shareholder as “self-funds” rather than “the borrowed money”) constitutes “an act of causing harm” under Article 188-4(4)2 of the former Securities and Exchange Act to the effect that the disclosure of the acquisition fund for stocks and bonds with warrants by a major shareholder of the company constitutes “an act of causing harm” under Article 188-4(4)2 of the former Securities and Exchange Act, on the ground that it is apparent that the fear of large-scale sale in the market would be resolved and that the stock

Examining the reasoning of the judgment below and the adopted evidence in light of the aforementioned legal principles, the above determination by the court below is just and acceptable. In so doing, contrary to the allegations in the grounds of appeal by Defendant 4, there were no errors by misapprehending the legal principles regarding false recognition, etc., or by misapprehending the legal principles regarding

(B) The part on Defendant 1

The court below affirmed the judgment of the court of first instance which acquitted Defendant 1 of this part of the facts charged on the ground that there is no evidence that Defendant 1 knew or anticipated Defendant 4 to give public notice of 25 billion won, which was committed in the process of taking over the media of this case, but did not allow Defendant 4 to use his own funds and accounts, even though he borrowed 25 billion won as if he were his own funds.

Examining the relevant evidence in light of the records, the above determination by the court below is acceptable in accordance with the reasonable free evaluation of judges of the fact-finding court. Contrary to the prosecutor’s grounds of appeal, there were no errors by misapprehending the legal principles regarding the requirements for establishment of a joint principal offender, or by misapprehending the facts contrary to logical

(2) As to the use of deceptive scheme through a stock transaction in the name of a foreign corporation

The lower court determined that, in light of the fact that Defendant 4 planned to sell high-priced stocks with warrant from the beginning; Defendant 4’s participation in capital increase with three foreign pesters owned by Defendant 1; Defendant 4 could mislead foreign institutional investors or many foreign investors into making an investment through normal investment decisions; Defendant 4’s intent to sell and purchase media promotional stocks in the name of bitdices and Defendant 1’s foreign corporation; Defendant 1 and Defendant 4 spread false information to the press regarding the acquisition of bonds with warrant; Defendant 4, who conspired with Defendant 1 and Defendant 4 to make a comprehensive transaction with Defendant 1 on the ground that the purchase price of new stocks or bonds with warrant from the beginning, made the purchase price of the company subject to acquisition known to the public; Defendant 4, who sold the new stocks of the company subject to acquisition or bonds with warrant from the beginning, made the purchase price known to Defendant 1 and Defendant 4, who provided Defendant 1 with the plan for unfair trading on the ground that it did not cause considerable amount of money to be paid to Defendant 1, a foreign corporation.

However, the above judgment of the court below is hard to accept for the following reasons.

Article 18-4 (4) 1 of the former Securities and Exchange Act prohibits “the act of intentionally spreading or using a deceptive scheme to gain unjust profits” in relation to the sale and purchase or other trading of securities. Here, “defluence” means means to induce certain acts by deceiving other parties to a transaction or unspecified investors (see Supreme Court Decision 2007Do1145, May 15, 2008). “The network” refers to the act of deceiving other parties by means of false information about objective facts or using a fraudulent method. However, according to the reasoning of the lower judgment, the lower court’s determination that Defendant 1’s act of purchasing or selling stocks using the name of a foreign corporation constitutes “the act of purchasing or selling stocks in the name of the foreign corporation” as stated in the facts below is not only the act of purchasing or selling stocks in the name of the foreign corporation, but also the act of purchasing or selling stocks in the name of the foreign corporation, based on the evidence duly adopted by the lower court, and thus, cannot be seen as an act of purchasing or selling stocks in the name of the foreign corporation.

Therefore, the court below erred by misapprehending the meaning of deceptive scheme as referred to in the fraudulent illegal transaction, in holding that the shares transaction of the Defendants by the above method constitutes an fraudulent unfair trading by fraudulent means.

(3) As to the misunderstanding of the use of documents

Article 188-4 (4) 2 of the former Securities and Exchange Act prohibits “an act of inducing others to make a false representation of material facts or by inducing other persons to make a misunderstanding by using a document with no necessary fact omitted.” This is a punishment for an act of inducing other persons to make a misunderstanding of material facts that affect investors’ investment judgment by using a false or false representation document (see Supreme Court Decisions 2003Do6759, Apr. 14, 2006; 2009Do1374, Jul. 9, 2009, etc.). Thus, in order to constitute a violation of subparagraph 2 of the above Article 188-4 (4) of the former Securities and Exchange Act, the requirement of “the use of documents” should be satisfied. However, this part of the facts charged does not constitute a violation of Article 28(1)4 of the former Securities and Exchange Act, separate from the fact that Defendant 4 and Defendant 1 did not make a normal change in ownership or an ordinary shareholder’s share report.”

Therefore, the court below erred by misapprehending the legal principles on the elements of a crime under Article 188-4 (4) 2 of the former Securities and Exchange Act.

(4) As to the use of deceptive scheme and dissemination of false facts regarding the sale of bonds with warrants

The lower court determined that Defendant 1 and 4’s act constitutes a deceptive scheme and a distribution of false facts as provided in Article 188-4(4)1 and 2 of the former Securities and Exchange Act, on the ground that Defendant 1 and 4’s act constituted the following: “The part which disclosed the details of the trading process and purchaser to the media when concluding a contract for trading bonds with a higher price than the market price in the name of the Kkhyth press,” and “the part which disclosed the details of the trading process and purchaser to the media,” was in the appearance that led to the increase in the market price or caused the decline in the market price.

Examining the reasoning of the judgment below and its adopted evidence in light of the aforementioned legal principles, the above determination by the court below is just and acceptable. In so doing, contrary to the allegations in the grounds of appeal by the Defendants, there were no errors by misapprehending the legal principles regarding deceptive scheme, or by misapprehending the legal principles regarding

(d) Method of calculating profits accrued from violations of unfair trade, etc.

For the purpose of Articles 207-2 and 214 of the former Securities and Exchange Act, the term “gains derived from a violation” means the benefit recognized as the causal relationship between the risk arising from the violation and the benefit accrued therefrom includes the benefits accrued to the accomplice. In ordinary cases, the causal relationship may be calculated by calculating the gross income from the transaction related to the violation by deducting the total expenses incurred in the transaction from the gross income. However, in a case where there are circumstances to deem that it is unreasonable to recognize the value of the benefit accrued from the violation in a specific case, the benefits accrued from the violation should be calculated by taking into account the legislative intent of Articles 207-2 and 214 of the former Securities and Exchange Act and the principle of responsibility, which are the major principle of criminal law, to eradicate the fraudulent unfair trading, with the intent of the violation and the background, 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 related thereto should be borne by the prosecutor (see Supreme Court Decision 2005Do46479, Dec. 14, 2009).

According to the reasoning of the judgment below, the court below determined that the total amount of KRW 17.2 billion in the sales profits as stated in the judgment below is the profits that the defendants acquired through fraudulent illegal transactions such as using a deceptive scheme and spreading false information as if there were foreign investors' normal investments, and thereby preventing the price decline, thereby gaining considerable profits from the market price. The above profits are indivisiblely combined with the profits from other acts by price manipulation or stock price increase factors.

However, as seen earlier, inasmuch as the lower court erred by misapprehending the relevant legal principles with respect to fraudulent fraudulent transactions caused by the Defendants’ use of deceptive scheme and the misunderstanding of documents through a stock transaction in the name of a foreign corporation, the lower court should re-examine this part and calculate the above benefit anew, so this part of the lower court’s judgment cannot be upheld.

Furthermore, in light of the above legal principles, since the subject to whom the calculation of stock transaction of this case and profits and losses accrue to Defendant 1, the "profit accrued from the violation" under Articles 207-2 and 214 of the former Securities and Exchange Act concerning the stock transaction should be calculated by the profits acquired by Defendant 1 in relation to his violation unless there are special reasons. In addition, in this case where the defendants can see that the whole amount of the market price acquired by Defendant 1 in the stock transaction of this case does not necessarily mean that the total amount of the market price acquired by the defendants 1 in the stock transaction of this case should be regarded as profits, but the profits should be excluded from the profits unless there are special reasons to the contrary, and the defendants' liability for the crime of Defendant 4 should also be recognized within the scope of the crime.

6. As to the defendant 1 and 4's violation of the duty to report under Article 210 subparagraph 5-2 and Article 202-2 of the former Securities and Exchange Act

A person who actually owns a company’s shares on his own account is obligated to report on the holding status and changes in the shares held in bulk regardless of the name thereof (see Supreme Court Decision 2004Do8963, Mar. 24, 2005).

The court below held that Defendant 1 was guilty of the charges on this part of the charges, which meet the requirements for the share ratio of the duty to report under the former Securities and Exchange Act, on the ground that Defendant 1’s failure to report the share status and change in the stock ownership owned in the name of the foreign corporation constitutes a violation of the duty to report under the former Securities and Exchange Act, based only on Defendant 1’s share of ownership, on the basis of the premise that Defendant 1 was actually Defendant 1.

On the other hand, the court below affirmed the judgment of the court of first instance that acquitted Defendant 4 of all the charges, except for the part guilty as seen earlier, on the ground that Defendant 1, the actual calculating entity of the stock transaction using Defendant 1’s name, becomes the subject of the “ obligation to report large-scale holding” and “report on the change of ownership” under the former Securities and Exchange Act, on the other hand, Defendant 4 cannot be the subject of the above obligation to report, and Defendant 4 cannot be the subject of the above obligation to report, and Defendant 4 did not prove that Defendant 4 actively participated in the crime or conspired to commit the crime from the beginning, such as ordering Defendant 1 to violate the obligation to report, etc.

Examining the reasoning of the judgment below and its adopted evidence in light of the above legal principles and records, the above fact-finding and judgment of the court below are just and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles regarding the subject of duty to report, requirements for establishment of a joint principal offender in conspiracy, or by violating the principle of no accusation, thereby

All of the grounds of appeal by Defendant 1 and the Prosecutor are without merit.

7. Scope of reversal

As seen earlier, the judgment of the court below on the fraudulent unfair trading committed by Defendant 1 and 4, who was found guilty of each of the facts charged in violation of Article 207-2 of the former Securities and Exchange Act, is unlawful. Furthermore, the court below deemed the remainder of the facts charged and the facts charged lawfully convicted as a concurrent crime under the former part of Article 37 of the Criminal Act and sentenced a single sentence. Thus, the entire conviction of the Defendants cannot be reversed.

On the other hand, since Defendant 1’s fraudulent publication of the details of raising funds for acquiring stocks, inducement of market price decline, and the part of the violation of the former Securities and Exchange Act, which was found guilty, are related to the violation of the former Securities and Exchange Act due to fraudulent unfair trading, the aforementioned guilty part and the part of the judgment of innocence should be reversed together.

8. Conclusion

Therefore, among the judgment of the court below, the guilty part against Defendant 1 and 4 and the violation of the former Securities and Exchange Act due to false public disclosure of the details of raising funds for acquiring stocks by Defendant 1, and the inducement of market price decline, and the conspiracy sale and purchase are all reversed, and this part of the case is remanded to the court below for a new trial and determination. The prosecutor's remaining appeals against Defendant 1 and 4 and appeals against Defendant 2 and 3 are all dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jeon Soo-ahn (Presiding Justice)