In the event that an investor who invested in accordance with the so-called "act of solicitation by providing the so-called "act of solicitation by an officer or employee of a securities company" suffers a loss, the requirements to establish tort liability.

Although executives and employees of a securities company recommended investment in a manner in violation of the Securities and Exchange Act, in order to establish tort liability for investment loss, it is necessary to consider the transactional act, transaction method, customer's investment situation, risk of transaction and degree of explanation, etc. and then make it possible to evaluate that the act of solicitation is an act of violation of Article 52 subparagraph 3 of the Securities and Exchange Act and subparagraph 1 of Article 13-3 of the former Enforcement Decree of the Securities and Exchange Act (Article 36-3 subparagraph 1 of the current Enforcement Decree of the Securities and Exchange Act) as a case where a general investor, who lacks experience, interferes with the formation of correct awareness of risk inevitably accompanying the transaction, or actively solicits the transaction with excessive risk in light of the customer's investment situation.

Article 750 of the Civil Act, Article 52 subparag. 3 of the Securities and Exchange Act, Article 13-3 subparag. 1 of the former Enforcement Rule of the Securities and Exchange Act (amended by Ordinance of the Ministry of Finance and Economy No. 167 of Nov. 21, 200, see Article 36-3 subparag. 1 of the Enforcement Decree

Supreme Court Decision 94Da38199 delivered on August 23, 1996 (Gong1996Ha, 2800) Supreme Court Decision 97Da58477 delivered on June 11, 1999 (Gong1999Ha, 1352 delivered on December 24, 199) 9Da4588 delivered on December 24, 199 (Gong2000Sang, 303)

Han Light Securities Co., Ltd. (Attorney Kim Jong-hwan, Counsel for the plaintiff-appellant)

Defendant-Counterclaim (Law Firm Shin & Kim, Attorneys Kim Han-soo, Counsel for defendant-Counterclaim)

Seoul High Court Decision 99Na52185, 52192 delivered on May 16, 2000

The appeal is dismissed. The costs of appeal are assessed against the plaintiff (Counterclaim defendant).

1. As to the grounds of appeal Nos. 1 and 4

Although executives and employees of a securities company recommended to make an investment in violation of the Securities and Exchange Act (hereinafter referred to as the “Act”), in order to establish tort liability against investors in the event of loss of investment result, after comprehensively taking into account transactions and transaction methods, customer’s investment situation, risk of transaction and degree of explanation, etc., it is necessary to determine that the act constitutes a case where a general investor with insufficient experience interferes with the formation of correct awareness about risks inevitably accompanying the transactional activity or actively solicits a transaction involving excessive risk in light of customer’s investment situation, and ultimately, it is deemed an act having the duty to protect customers in light of customer’s duty to protect customers (see, e.g., Supreme Court Decisions 93Da26205, Jan. 11, 1994; 94Da38199, Aug. 23, 196; 97Da58477, Jun. 11, 199; 204Da1384, Dec. 4, 1999).

According to the reasoning of the judgment below, the court below held that the plaintiff company is liable for damages suffered by the defendant as the employer of the non-party, since the non-party representative of the plaintiff (the counter-party, hereinafter referred to as "the plaintiff") caused error in the judgment of the defendant (the counter-party, hereinafter referred to as "the defendant") on the purchase of shares accompanied by excessive risk or actively recommended the defendant to purchase such shares, and thus the plaintiff company violated the duty to protect the customers under Article 52 subparagraph 3 of the Act. In light of the above legal principles and records, the above fact-finding and the judgment of the court below are just, and there is no error of law in matters of mistake of facts, misunderstanding of legal principles, or Supreme Court precedents

In the case of this case, it is clear that Article 52 subparagraph 3 of the Act applies to the type of prohibited act and the contents of delegation are stipulated in the Enforcement Decree or the Enforcement Rules of the same Act, which are subordinate statutes, so the plaintiff's defense of extinctive prescription based on the premise that the act constitutes prohibited act under Article 188-4 of the Act is without merit. The decision of the court below to the same effect is just, and the argument in the grounds of appeal

2. As to the grounds of appeal Nos. 2 and 3

The court below limited liability to 20% in consideration of the defendant's mistake in calculating the amount of damages to be compensated for by the plaintiff. In light of the records, the above measures of the court below are just and acceptable, and there is no error of law such as incomplete deliberation or misapprehension of legal principles as alleged in the grounds of appeal.

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 Son Ji-yol (Presiding Justice)