The judgment of the court below is reversed, and the case is remanded to Suwon District Court Panel Division.

The grounds of appeal are examined.

1. As to the violation of the Financial Investment Services and Capital Markets Act

A. After finding the facts as stated in its holding, the lower court determined that the goods traded on the “H” and “L” website (hereinafter “each of the private sites of this case”) operated by the Defendants constituted derivatives that are referred to in each subparagraph of Article 5(1) of the Financial Investment Services and Capital Markets Act that are linked to “undermining economic phenomena, etc. and that can be calculated or assessed by price index units in a reasonable and appropriate manner, and that the Defendants engaged in financial investment business by engaging in trading derivatives on their own account.”

B. However, it is difficult to accept the above determination by the court below for the following reasons.

The principle of no crime without the law requires that crimes and penalties should be prescribed by law in order to protect individual freedom and rights from arbitrary exercise of the state penal authority.

In light of such purport, the interpretation of the penal law must be strict, and it is not permitted to expand or analogically interpret the meaning of the explicit penal law in the direction unfavorable to the defendant as it is against the principle of no punishment without law.

(See Supreme Court Decision 201Do7725 Decided August 25, 2011). Article 11 of the former Capital Markets Act provides that “No person shall engage in financial investment business (excluding investment advisory business and discretionary investment business) without obtaining authorization (including authorization for changes) for financial investment business under this Act.” Article 444 Subparag. 1 of the same Act provides that authorization for changes to financial investment business shall be granted in violation of Article 11.