Plaintiff (Counter-Defendant) (Law Firm Sejong, Attorneys Lee Jae-ho et al., Counsel for the plaintiff-appellant)

KTB Asset Management Corporation

Defendant 2 (Bae, Kim & Lee LLC, Attorneys Kim Man-man et al., Counsel for the defendant-appellant)

December 24, 2014

Seoul Central District Court Decision 2012Gahap74460 Decided November 21, 2013

1. Of the judgment of the court of first instance, the part against Defendant (Counterclaim Plaintiff) KB Asset Management Co., Ltd. and Defendant 2 in excess of the amount ordered to be paid below shall be revoked, and all of the claim against Defendant (Counterclaim Plaintiff) KB Asset Management Co., Ltd. and the claim against Defendant 2 shall be dismissed.

The Defendants pay to each Plaintiff 374,034,786 won with 5% interest per annum from July 15, 2014 to February 6, 2015, and 20% interest per annum from the next day to the day of full payment.

2. All appeals filed by the Plaintiff (Counterclaim Defendant), the Defendant (Counterclaim Plaintiff), the assets management company, Defendant 2’s remaining appeal, and the Defendant (Counterclaim Plaintiff)’s counterclaim claim filed in the trial is dismissed.

3. A. Upon filing an application for the return of provisional payments by the Defendant (Counterclaim Plaintiff) KB Asset Management Company, the Plaintiff (Counterclaim Defendant) pays to the Defendant (Counterclaim Plaintiff) KB Asset Management Company 454,211,789 won and the amount calculated by applying the rate of 5% per annum from November 22, 2013 to February 6, 2015, and 20% per annum from the next day to the date of full payment.

B. The remaining claim for return of provisional payments by Defendant (Counterclaim Plaintiff) KF Asset Management Company is dismissed.

C. The above paragraph (a) can be provisionally executed.

4. Of the total cost of litigation, the portion arising from the principal lawsuit (including the cost of filing an application for return of provisional payment) between the Plaintiff (Counterclaim Defendant) and the Defendant (Counterclaim Plaintiff) KB Asset Management Co., Ltd. is borne by the Plaintiff (Counterclaim Defendant) and the remainder by the Defendant (Counterclaim Plaintiff) KB Asset Management Co., Ltd., respectively. The portion arising from the counterclaim is borne by the Defendant (Counterclaim Plaintiff) KB Asset Management Co., Ltd., and the portion arising from the counterclaim between the Plaintiff (Counterclaim Plaintiff) and the Defendant 2 is borne by the Plaintiff (Counterclaim Defendant) and the remainder by the Defendant 2, respectively.

1. Purport of claim

(a) Main claim;

Defendant (Counterclaim Plaintiff; hereinafter “Defendant”) and Defendant 2 jointly and severally pay to the Plaintiff (Counterclaim Defendant; hereinafter “Plaintiff”) 2,00,000,000 and 5% per annum from April 18, 2006 to the delivery date of a duplicate of the complaint of this case, and 20% per annum from the next day to the day of complete payment.

(b) Preliminary counterclaim;

The Plaintiff transferred the Plaintiff’s equity share of 2,000,000,000 equity shares of the Plaintiff’s KTBF private equity fund to Defendant KTB Asset Management Co., Ltd. (Defendant KTB Asset Management Co., Ltd. filed a preliminary counterclaim on the condition that the main claim is accepted in the first instance).

2. Purport of appeal

A. The plaintiff

The judgment of the first instance is modified as follows. The defendants jointly and severally pay to the plaintiff 2,00,000,000 won with 5% interest per annum from April 18, 2006 to the delivery date of the copy of the complaint of this case, and 20% interest per annum from the next day to the day of complete payment.

B. The Defendants

The part of the judgment of the first instance against the Defendants shall be revoked and the plaintiff's claim corresponding to the revocation part shall be dismissed.

3. Purport of request for the return of provisional payments

The Plaintiff shall pay to Defendant KB Asset Management Co., Ltd. 828,246,575 won, and from November 22, 2013 to the service date of a duplicate of the application for the return of the instant provisional payments, 5% per annum, and 20% per annum from the next day to the day of complete payment.

1. Basic facts

The following facts are not disputed between the parties, or are acknowledged by comprehensively taking account of the following facts: Gap evidence 1 (the same shall apply to Eul evidence 1), Eul evidence 2, Eul evidence 3, evidence 4-1, 2, Eul evidence 5, evidence 6-1, 2, Gap evidence 7-2, Gap evidence 9, evidence 11-1, 12, Gap evidence 19-1, 2, Eul evidence 41, Eul evidence 2-1, 2-2, Eul evidence 3-1, 5-1 through 3, Eul evidence 5-9, Eul evidence 12 (the same shall apply to evidence 17-1, 17-2), Eul evidence 17-2, Eul evidence 19-2, Gap evidence 19-2, Eul evidence 41, 2-2, Eul evidence 5-1, 5-2, Eul evidence 9, Eul evidence 12 (the same shall apply to evidence 17-1, 17-2, and Eul evidence 17-2:

(a) Status of a party;

Defendant KB Asset Management Co., Ltd. (hereinafter “Defendant Co., Ltd.”) is a corporation established for the purpose of asset management business, etc., and Defendant 2 is the representative director of Defendant Co., Ltd.

(b) Forming a consortium with the Busan Savings Bank for underwriting the Central Busan Savings Bank;

Around January 2006, the Defendant Company decided to take over the Central Busan Savings Bank (hereinafter referred to as the “Central Savings Bank”) (hereinafter referred to as the “Central Busan Savings Bank”), the Busan Savings Bank (hereinafter referred to as the “Central Savings Bank”) and a consortium with the Plaintiff around September 29, 2010, to acquire the company’s trade name as the Central Savings Bank (hereinafter referred to as the “Central Savings Bank”) on April 24, 2006, with the intention to establish a Central Savings Bank (hereinafter referred to as the “Central Savings Bank”) and to attract investors for five years, which is a limited partnership under the Commercial Act, the Defendant Company established a private equity fund as an executive partner, and prepared the investment proposal and made the following investment proposal against the Defendant Company as an individual investor (hereinafter referred to as the “Investment Proposal”).

(2) Sale of third party shares of the PEF to a third party within 2-3 years after the listing of the 100 billion won-end financial market or the KOSDAQ market (in the case of an insolvent financial institution through M&A or listing, the 12.0%-end financial profit rate of the 12.0%-end financial market or the KOSDAQ market at an early stage after the normalization of the 12.0%-end financial market or the KOSDAQ market. 4%-end financial profit savings of the 12.0%-end financial market or the KOSDAQ market (in the case of an insolvent financial institution through M&A or listing, the 1.5%-end financial profit rate of the 1.0%-end financial profit of the 1.0 billion won-end financial market or the KOSDAQ market). 4%-end financial profit of the 1.3 billion won-end financial investment company after the listing of the 1.4 billion won-end financial profit of the 1.5 billion won-end financial investment company (the 1.5 billion won-end financial profit savings).

C. Establishment of the private equity fund of this case

The Defendant Company established a private equity fund (hereinafter “instant private equity fund”) on February 2, 2006, KTB-SB, and became a general partner and managing member and representative member. Some of the articles of incorporation (Evidence A5) of the instant private equity fund are as follows.

Article 11 of the Table included in the main sentence of this Act (Restrictions on the liability of members with unlimited liability) No general partner or his/her related persons shall be liable for any damages incurred by the company or other members due to any act related to the following subparagraphs (including omission): Provided, That this shall not apply where the said damages were caused by the intention or gross negligence of the company or its related persons:

D. Conclusion of this case’s investment agreement

On February 3, 2006, the Defendant Company entered into an investment agreement with the Busan Savings Bank and the non-party 1 and the non-party 2, who is its major shareholder (hereinafter “instant investment agreement”).

(2) Defendant 1 and Defendant 2 shall be jointly and severally authorized to participate in the acquisition and acquisition of shares of the Central Savings Bank on the basis of the total amount of 12,50,000,000 won (Won 12,50,000-) in the capacity of the managing members of the Busan Metropolitan Government; (3) Defendant 1 shall be jointly and severally authorized to participate in the acquisition and acquisition of shares of the Central Savings Bank on the basis of Article 3, the acquisition and subscription to new shares of the Central Savings Bank; and (4) The acquisition amount of the Central Savings Bank on the acquisition of shares of the Busan Metropolitan Government Savings Bank on December 30, 2005 shall be determined within the scope of 5% of the total acquisition amount of the shares of the Busan Metropolitan Government Savings Bank on the basis of the Busan Metropolitan Government Savings Bank on the basis of the provisions of Article 2, the number of shares purchased and outstanding shares shall be determined within the scope of 1,500,000,000,000 won.

E. The Plaintiff’s acquisition of shares of the instant private equity fund and investment in the central savings bank of the instant private equity fund

The Plaintiff, around January 2006, was solicited to make an investment based on the investment proposal of this case by the Defendant Company, and accordingly, became a partner with limited liability of the said Company by investing KRW 2,000,000 in the private equity fund of this case on April 18, 2006 (hereinafter “instant investment”).

Ultimately, the Plaintiff invested 5,00,000,000 won in total, and 12,500,000,0000 won in shares of the Central Savings Bank from April 2, 2006 to June 2006 (55% of shares in the Central Savings Bank from Busan District Development Fund, and the Busan District Development Fund (hereinafter “Seoul District Development Fund”) invested KRW 6,60,000,000 and the Defendant Company acquired KRW 300% of shares of the Central Savings Bank from June 2006. In addition, the Busan District Bank acquired KRW 6,00,000,000 in shares of the Central Savings Bank from April 2006 to June 2006.

Meanwhile, on April 24, 2006, Nonparty 3, an employee of the Defendant Company, was appointed as a director of the Central Busan Savings Bank (outside director), but resigned on April 24, 2009 (from August 31, 2007 to April 24, 2009).

F. Plaintiff’s request for put options, etc.

On April 1, 2009, the Plaintiff requested the Defendant Company to exercise put options against the Busan Savings Bank. However, the instant private equity fund did not exercise put options. At that time, the Defendant Company assumed that the date of disposal of stocks was December 10, 2009 and applied 12% welfare per annum from April 18, 2006 to December 31, 2008, which is the Plaintiff’s date of disposal of stocks, to the Plaintiff. From January 1, 2009, the Defendant Company prepared a list that calculated anticipated profits when applying 15% welfare per annum.

In addition, the defendant company presented to the plaintiff the date of disposal of shares as of December 31, 2010, and made and put up a list of profits expected to be derived from the application of 15% per annum from January 1, 2009 as above.

On October 14, 2010, the instant private equity fund entered into a contract with the social loan company E&P to sell the shares of the central savings bank held by the instant private equity fund, but this was no longer effective on December 2010.

(g) Capital erosion and bankruptcy of the central installment savings bank; and

On February 19, 2011, the central savings bank was subject to a disposition of business suspension from the Financial Services Commission due to liquidity shortage, and on April 29, 201, it was ordered by the Financial Services Commission as an insolvent financial institution to improve its business management for six months, including business suspension, etc.

After January 2012, the Central Savings Bank filed a petition for bankruptcy with the Seoul Central District Court (Seoul Central District Court 2012Hahap2) and was declared bankrupt on February 23, 2012.

H. Current status of changes in investors of the instant private equity fund;

At the time of the establishment of the instant private equity fund, the Defendant Company owned 500 million shares, 5 billion shares, 5 billion shares, 5 billion shares, and 2 billion shares for the Plaintiff. However, on April 2, 2007, some of the shares in the Seoul Large Development Fund were transferred to Contacts Co., Ltd., Ltd., and on January 25, 2008, the shares in Daehan was transferred to Nonparty 4, 5, and 6 respectively, and on July 9, 2008, the shares in 2.5 billion shares were transferred to Nonparty 7, and on April 7, 2009, the 2.5 billion shares were transferred to 2.5 billion shares for the Defendant Trust Co.,, Ltd., Ltd., and the remaining shares were transferred to Nonparty 2,500,000 shares for 3 billion shares for 200,500,000 shares for 200,000 shares for 3 billion shares for 200,005 billion shares for the Plaintiff.

(i) Declaration of bankruptcy of Busan Savings Bank and related cases;

On February 15, 2011, the instant private equity fund exercised put options against the Busan Savings Bank. On July 14, 2011, the instant private equity fund filed a lawsuit against the Busan Savings Bank claiming KRW 12,500,000 from the purchase price of shares (Seoul Central District Court 201Ga72290).

On August 16, 2012, when the lawsuit was pending, the Busan Savings Bank was declared bankrupt (the Busan District Court 2012Hahap4), and the Korea Deposit Insurance Corporation was appointed as the bankruptcy trustee of the Busan Savings Bank.

Accordingly, the Korea Deposit Insurance Corporation taken over the lawsuit of the Busan Savings Bank. The plaintiff, on April 18, 2006, which was the date of the purchase price of shares, and the agreement calculated by the ratio of 12.5% to August 16, 2012, which was the date of the declaration of bankruptcy of the Busan Savings Bank, was amended as a lawsuit for confirmation of bankruptcy claims claiming that the bankruptcy claims of 25,300,000 won within the scope of the total amount of the agreement calculated by the ratio of 12.5% from August 16, 2012, which was the date of the declaration of bankruptcy of the Busan Savings Bank. The first instance court accepted the claim of the private equity fund of this case on May 24, 2013, confirmed that the bankruptcy claims against the Busan Savings Bank of this case were KRW 25,30,000,000,000, and appealed by the Korea Deposit Insurance Corporation, but the judgment became final and conclusive around April 3, 2014 (Seoul High Court).

On the other hand, on October 31, 2011, Defendant 2 was prosecuted against the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud) and the Financial Investment Services and Capital Markets Act (hereinafter “the Financial Investment Services and Capital Markets Act”) in relation to the act committed at the time of soliciting capital increase by the Busan Savings Bank to the Samsung Blue Scholarship Scholarship Foundation (hereinafter “Tlue Glue Scholarship Scholarship Foundation”) and the Educational Foundation Blue University (hereinafter “SI”), and Defendant 2 was prosecuted against the violation of the Financial Investment Services and Capital Markets Act. The first instance court issued a conviction on the charge of violation of the Financial Investment Services and Capital Markets Act due to fraudulent solicitation against the Defendants, but rendered a judgment of innocence on the charge of violation of the Financial Investment Services and Capital Markets Act and the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud) (hereinafter “Seoul Central District Court Decision 2011Da1372). However, the appellate court rejected the Defendants’ appeal in this case (Seoul High Court Decision 2014No. 124).

2. Determination on the main claim

A. Summary of the Plaintiff’s claim

As the value of the shares of the Central Savings Bank, which is the assets of the instant private equity fund, invested by the Plaintiff, lost the value equivalent to KRW 2,00,000,000,000. The Defendants are liable for damages as follows. As such, Defendant 2 is liable to compensate for damages suffered by the Plaintiff pursuant to Article 750 of the Civil Act as an actor, and Defendant Company is jointly and severally liable with Defendant 2 pursuant to Articles 389(3) and 210 of the Commercial Act.

1) Violation of intentional deception or duty to protect investors at the stage of soliciting investment.

A) Violation of the duty to protect investors regarding the availability of put options

From the lapse of one year after investment, the Defendants recommended the Plaintiff to make an investment by exercising put options against Busan Savings Bank, thereby recovering the principal and interest of investment. However, the Busan Savings Bank already acquired 30% of the shares of the Central Savings Bank and the Busan Savings Bank was sentenced to a fine on October 18, 2004 due to a violation of the Securities and Exchange Act, etc. As such, the approval of the Financial Supervisory Commission, which is necessary for acquiring additional shares, was impossible to implement put options in principle. The Defendants cannot be deemed to have prepared an investment recovery scheme in conformity with the investment proposal presented to the Plaintiff, and thus, failed to fulfill their duty to protect investors.

B) Violation of duty to explain and breach of duty to protect investors due to provision of conclusive judgment

In the process of soliciting investment, the Defendants did not notify at all the risk of not being able to exercise put option itself because it is difficult to approve by the Financial Supervisory Commission due to the situation of Busan Savings Bank, which is the other party to put put option option, at the time of guaranteeing the profit of 12% per annum. The Defendants emphasized only the safety of the instant investment, such as guaranteeing the profits of 12% per annum and guaranteeing the same. The Defendants provided information that lost balance concerning the profits and risks of the instant investment.

2) Violation of the duty to protect investors at the operating stage.

A) The Defendants’ delay in exercising put options, and deception on the grounds of delay

On April 2009, the Plaintiff requested the Defendants to exercise put options against the Busan Savings Bank. However, the Defendants, as seen above, should be recognized by the Financial Services Commission that the acquisition of shares of the Busan Savings Bank following the exercise of put options was legally impossible. However, the Defendants delayed the exercise of put options by paying profits calculated at 15% per annum to the Plaintiff.

B) Liability for damages caused by concealment of financial status of the Central Bank of Korea

On April 24, 2006, the Defendants concealed the actual financial situation despite that it was a situation in which the actual financial situation of the central installment savings bank was sufficiently known, such as dispatching Nonparty 3 employees of the Defendant Company to outside directors of the central installment savings bank.

B. Occurrence of liability for damages

1) The occurrence of liability for damages by the defendant company

A) Status of the Defendant Company

In relation to the Plaintiff who invested in the instant private equity fund, the Defendant Company holds the position as an asset management company that bears the duty to protect investors and the status as an executive partner of the instant private equity fund. As such, the Plaintiff claims the breach of duty based on its respective status.

B) Unfair solicitation under an agreement to guarantee profit;

Article 144-11(2)2 of the former Indirect Investment Asset Management Business Act (repealed by Act No. 8635, Aug. 3, 2007; Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act; hereinafter “former Indirect Investment Act”) provides that where the executive partner or managing partner of a private equity fund is a corporation, the executive officer or employee of the private equity fund shall not engage in an act of unfairly soliciting the person to become a partner by promising to guarantee the principal or a certain amount of profit, etc.

However, the investment proposal of this case prepared by the defendant company stated that the private equity fund of this case can sell the shares of the central installment savings bank at the price calculated by adding interest of 12% per annum to the investment principal to the Busan installment savings bank, i.e., the right to put put options, and that the major shareholders of the Busan installment savings bank and the Busan installment savings bank provide a letter of undertaking to ensure the principal and profit rates to the members of the private equity fund of this case. The investment agreement of this case concluded between the defendant company, the Busan installment savings bank, and the non-party 1 and the non-party 2 also stated that the private equity fund of this case has the right to sell the shares of the central installment savings bank of this case to the Busan installment savings bank by adding interest of 12% per annum (or 12.5%) to the purchase price. Thus, it is reasonable to deem that the defendant company violated Article 14-14-12 (2) of the former Indirect Investment Act because it agreed to guarantee the principal and profit rates by soliciting the investment of this case to the plaintiff.

C)Violation of the duty to protect investors

An asset management company owes the duty of care to protect investors so that investors can make reasonable investment decisions based on the relevant information by providing correct information about the profit structure and risk factors of an investment trust to a selling company or investors. As such, in the event that an asset management company prepares and delivers a management plan for an investment trust to investors, it includes indications that may cause misunderstanding to investors as to important matters or information that has lost balance concerning the profit and risk of an investment trust. If it affects investors’ investment decisions, the asset management company cannot be deemed to have fulfilled its duty to protect investors at the stage of investment recommendation (see, e.g., Supreme Court Decision 2010Da76368, Jul. 28, 2011).

In determining the investment of this case, the Plaintiff believed the solicitation made by Defendant 2, the representative director of the Defendant Company, to be able to exercise put options to the Busan Savings Bank. In light of the following circumstances, it is reasonable to deem that the Defendant Company did not provide the Plaintiff with accurate information as to whether put options could be exercised, and that it violated the Plaintiff’s investment decision, and that it did not provide the Plaintiff with accurate information as to whether put options could be exercised at put options at put, and that it violated the Plaintiff’s duty to protect investors or fiduciary duty at the time of investment recommendation, and that it violated the Plaintiff’s duty to protect investors or fiduciary duty.

(1) The investment proposal of this case states that the principal and interest of the investment can be recovered by using put options to Busan Savings Bank from the time one year elapsed after investment. However, according to Article 10-2 (4) and (5) of the former Mutual Savings Banks Act (amended by Act No. 8143 of Dec. 30, 2006; hereinafter "former Mutual Savings Banks Act"), Article 7 (2) of the former Enforcement Decree of the Mutual Savings Banks Act (amended by Presidential Decree No. 19464 of May 3, 2006; hereinafter "former Enforcement Decree of the Mutual Savings Banks Act"), and Article 7 (2) of the former Mutual Savings Banks Act (amended by Presidential Decree No. 19464 of May 3, 2006; hereinafter "former Enforcement Decree of the Mutual Savings Banks Act"), the Busan Savings Bank, which planned to acquire 30% stocks of the Central Savings Bank with the instant private equity fund and acquired 30% stocks of the Korea Savings Bank, and it cannot be punished by the Busan District Court for 20000.4 years.

(2) Nevertheless, the representative director or the person in charge of the defendant company did not verify whether there are grounds to support the horses of the plaintiff 1 and the non-party 2, who is the representative director or the major shareholder of the Busan Savings Bank, and without collecting objective information, emphasizing that the private equity fund of this case can guarantee the principal and 12% profits per annum by exercising put options against the Busan Savings Bank after the lapse of one year from the time when the investment was made at the time of soliciting the investment of this case. In particular, it did not mention about the possibility of implementing the Busan Savings Bank, which is the other party to put options, the other party to put options, and suggested only the management performance and financial structure of the Busan Savings Bank.

(3) The non-party 3, who worked as a director of the strategic investment team of the defendant company, stated that the Busan District Savings Bank was subject to sanctions for violation of the duty of disclosure of listed companies by the Financial Supervisory Commission, and thus, it was not possible to obtain approval from the Financial Supervisory Commission. Thus, the non-party 2, etc. of the Busan District Savings Bank, who was an executive officer of the Busan District Savings Bank, requested the defendant 2 to make an investment. The non-party 2, who was an executive officer of the Busan District Savings Bank, intended to take over the Central District Savings Bank, but did not have to take over the Central District Savings Bank under the punishment of violation of the Securities and Exchange Act, etc. on October 2004, because the non-party 2, who was an executive officer of the Busan District Savings Bank, was not aware of the fact that 30% of the shares of the Central District Savings Bank were not approved by the Financial Supervisory Commission and requested the establishment of the Busan District Savings Bank with the defendant 2, the representative director of the defendant 12-2, the Busan District Savings Bank.

(1) On the contrary, the Defendants asserted that Article 10-2 (4) and (5) of the Mutual Savings Banks Act is not a mandatory provision, but merely a regulatory provision, and thus, even if they acquire shares without obtaining approval from the Financial Services Commission pursuant to each of the above provisions, the acquisition of shares does not become null and void, but it does not include cases where the degree of violation, etc. is deemed minor under Article 7 (2) [Attachment 2] Item 1 (c) (1) of the former Enforcement Decree of the Mutual Savings Banks Act, and Article 4 (1) of the instant Investment Convention provides that the instant private equity fund may exercise put options not only the Busan Savings Bank but also the third party designated by the Busan Savings Bank, so it is not legally impossible to exercise put options. Accordingly, the Defendant Company did not notify the Plaintiff of the recommendation to make the investment in this case and thus did not violate its duty to protect investors.

In light of the above facts, it is reasonable to view that the Defendants were unable to exercise put options on the instant private equity fund as stated in Gap evidence 28, Eul evidence 15, and Eul evidence 19 as follows: ① the most fundamental and safe method by which the instant private equity fund can be recovered to Busan Savings Bank, and investors including the Plaintiff were able to recover the amount of investment in the instant case, and the Busan Savings Bank was unable to obtain approval from the Financial Services Commission under the relevant provisions. ② The Busan Savings Bank and the Busan Savings Bank did not request the Financial Supervisory Commission to exercise put options on the instant private equity fund on the ground that it could not be approved by the Financial Supervisory Commission. However, it appears that the Defendants, who were its employees at the time of the establishment of the instant private equity fund, did not actually use put options on the instant private equity fund for the reason that the Busan Savings Bank could not obtain approval from the Financial Supervisory Commission.

(2) In addition, the Defendants asserted to the effect that there was no causation between the Defendant Company’s violation of the duty to protect investors and the Plaintiff’s loss, since the Plaintiff’s loss due to the instant investment was due to the suspension of business and the declaration of bankruptcy by Busan Savings Bank.

In light of the following circumstances, if the Defendant Company notified the Plaintiff of the fact that it is practically impossible to exercise put options, or that the financial situation of the Central Installment Savings Bank is not good, the Plaintiff did not make the instant investment itself or is highly likely to have recovered the instant investment amount early by transferring the equity shares of the instant private equity fund to a third party, etc., it is difficult to view that the causal relationship between the Defendant Company’s violation of the duty to protect investors and the Plaintiff’s damage was severed, and therefore, the Defendants’ assertion is groundless.

2) The occurrence of Defendant 2’s liability for damages

The subject of the duty to explain in relation to investors is a financial institution that solicits investments, and it cannot be interpreted that the representative director of a financial institution is jointly and severally liable for damages caused by the violation of the duty to explain by the financial institution. Therefore, in order to recognize the representative director of a financial institution's liability for damages, the general requirements of Article 750 of the

In light of the following circumstances acknowledged earlier and the evidence Nos. 27 and 28, which are acknowledged as comprehensively considering the purport of the entire pleadings, Defendant 2, the representative director of the Defendant Company, was negligent in not notifying the Plaintiff of the impossibility of exercising put-in options to the Busan Savings Bank at the investment recommendation stage of the instant private equity fund. As long as Defendant 2 had the Plaintiff make the Plaintiff make the instant investment by competition between Defendant 2’s negligence and the Defendant Company’s negligence, Defendant 2 is jointly and severally liable for damages suffered by the Plaintiff.

A) The instant investment is a private equity fund that is an investment for a specific minority, not an unspecified majority, and the Plaintiff became aware of the instant private equity fund through Defendant 2, which was known through introduction by Nonparty 10, who is the largest shareholder of the Defendant Company and the representative director. Defendant 2 was not merely seeking the instant investment to the Plaintiff, but rather actively recommended the instant investment in relation to the Plaintiff. In the process, it seems that the Plaintiff emphasized the guarantee of principal and profit return arising from the exercise of put-in options.

B) As seen earlier, it appears that Defendant 2, the representative director of the Defendant Company, was to have a major impact on the situation where Defendant 2, the representative director of the Busan Savings Bank, and Nonparty 1 and Nonparty 2, the major shareholder of the Busan Savings Bank, etc., and the officers of the Busan Savings Bank proposed to acquire the Central Savings Bank, and actively promoted this, the Busan Savings Bank acquired only 30% of the shares of the Central Savings Bank, and the Busan Savings Bank acquired much more than 55% of the shares of the Central Savings Bank, and Nonparty 2 of the Busan Savings Bank acquired only 30% of the shares that the Busan Savings Bank can acquire without the approval of the Financial Services Commission, and the remaining 5% of the shares acquired by the Busan Savings Bank. In light of the empirical rule, Defendant 2, as the representative director of the Defendant Company, was well aware of the above structure. In light of the fact that Defendant 2, as stated in the investment proposal of this case, did not have known or could not immediately exercise any put to Busan Savings Bank after one year.

C) The Plaintiff seems to have made the instant investment in trust by Defendant 2, not only decided to make the instant investment upon Defendant 2’s investment recommendation, but also requesting Defendant 2 to exercise put options.

3) Sub-determination

Therefore, the defendant company and the defendant 2 are liable for the plaintiff's damages caused by the investment of this case as joint tortfeasor.

C. Scope of liability for damages

1) Damages

Property damage caused by a tort refers to the difference between the property disadvantage caused by an illegal harmful act, i.e., the property condition that would have existed without the illegal act and the current property status that caused such illegal act (see, e.g., Supreme Court Decision 91Da33070, Jun. 23, 1992). Whether actual damage caused by a tort occurred should be reasonably determined in light of social norms. In addition, in cases of a tort, the damages for damages caused by a tort shall be the initial date at which the damage was incurred. The amount calculated by subtracting the total amount of money collected or recoverable by the investor due to the violation of an asset management company’s duty to protect investors under the former Indirect Investment Act from the investment principal and the amount calculated by subtracting the total amount of money that the investor would have acquired with the beneficiary certificate acquired with the investment principal and, in cases where redemption is permitted even after the maturity or even after the date of redemption, it is determined when it is possible to calculate the remaining value of beneficiary certificate as the date of redemption, and it shall be deemed reasonable to have commenced damages for damages arising from a tort (see, 29Da24, etc.).

According to the above legal principles, the plaintiff's investment amount of 2,00,00,000 won 2,00,000,000 won 2,000,000 won - 24, Eul evidence 25-1, 26-1, 26-2, and Eul evidence - 27 - 60 - 46 - 6 - 7 - 6 - 7 - 6 - 4 6 - 7 - 6 - 7 - 6 5 - 6 - 4 5 - 7 - 6 - 6 - 4 5 6 - 6 - 7 - 6 - 4 5 6 - 6 - 7 5 - 6 - 6 - 4 ,0000 won of net assets amount of 5 -6 -6 5 -6 -6 7 ,06 ,04 20

2) Limitation on liability

However, evidence Nos. 27-1, 2, and 2-2 of evidence Nos. 27-1, 3-1, 2-2, and 4-1 through 3-2 of evidence Nos. 5-1, 2-2, and 22-1, 2-2 of evidence Nos. 23-1, 2, and 27 are considered as a whole in light of the following circumstances, i.e.,,, the Plaintiff’s return of the Plaintiff’s share to the Plaintiff on January 12, 207’s business start-up investment business to the extent that it appears that the Plaintiff would have been able to seek investment risk return from the Plaintiff on January 24, 2007, to the extent that it appears that the Plaintiff would have been able to undertake investment advisory business and investment risk-related investment partner’s average investment risk-related investment partner’s share in the instant case (hereinafter “the Plaintiff’s share transfer”).

3) Sub-determination

Therefore, the Defendants are jointly and severally liable to pay to the Plaintiff 374,034,786 won (i.e., KRW 935,086,966 x 40%) and damages for delay calculated at each rate of 20% per annum under the Civil Act from July 15, 2014, which is the date of preparation of a regular report of February 15, 2014, where it is deemed reasonable for the Defendants to dispute on the existence or scope of the obligation to perform the obligation from July 6, 2015 to February 6, 2015, and from the next day to the date of full payment.

3. Determination on the ancillary counterclaim claim by the defendant company

A. Determination on this safety defense

The plaintiff asserted that the preliminary counterclaim filed by the defendant company against the time when the date of closing the pleadings at the trial at the trial time is imminent is unlawful as it significantly delays the litigation procedures. However, the plaintiff's preliminary counterclaim of this case is related to the plaintiff's assertion of the residual value deduction of the shares of the private equity fund of this case held by the defendant company from the trial at the trial at the trial at the trial at the court of first instance, and thus it cannot be deemed that the plaintiff's preliminary counterclaim of this case significantly delays the litigation procedures of this case due to the lack of additional deliberation

B. Judgment on the merits

In a case where the Defendant Company is liable for damages against the Plaintiff upon acceptance of a part of the Plaintiff’s principal claim, the Plaintiff still may receive dividends from the instant private equity fund even after the full payment of damages was made, and thus, it is likely to gain double benefits. Therefore, the Defendant Company asserts that the Plaintiff is liable to transfer the Plaintiff’s equity interest in the instant private equity fund to the Defendant Company by applying or analogically applying the legal doctrine on return of unjust enrichment or the legal doctrine on “Subrogation of the Compensationer” as stipulated under Articles 763 and 399 of the Civil Act.

Article 763 and Article 399 of the Civil Act provide that if a person who suffered damage due to a tort receives all the value of an article or right due to such tort, the tortfeasor who compensates for the damage shall subrogate the person who has received the damage concerning such article or right. This is to prevent the person who has received the damage from obtaining double benefit by holding the article or right continuously.

As seen earlier, in calculating the Plaintiff’s amount of damages, the remaining value of the Plaintiff’s share was deducted. As such, so long as the amount of damages was calculated by deducting the remaining value of the Plaintiff’s share, even if the Plaintiff maintained his status as an partner of the instant private equity fund after receiving damages damages acknowledged earlier and received dividends from the instant private equity fund, it cannot be deemed that double profit was earned.

In light of the above, Articles 763 and 399 of the Civil Act provide that in cases where a tortfeasor compensates for damage to the whole amount of the goods or rights infringed upon, the tortfeasor shall be subrogated to the person who received the compensation for such goods or rights. As seen earlier, even according to the judgment of this case, the Plaintiff is compensated for part of the amount of damage caused by the investment of this case. Thus, it is reasonable to analogically apply Article 399 of the Civil Act to this case. Thus, the Defendant company’s preliminary counterclaim is without merit.

4. Determination on Defendant Company’s application for return of provisional payment

Meanwhile, as examined below, the part against the defendants who ordered payment in excess of the above cited amount among the judgment of the court of first instance is revoked by a declaration of the court of first instance and the sentence of provisional execution corresponding to that part becomes null and void. In light of the whole purport of the arguments in subparagraph 28-1 and subparagraph 2 of this Article, the plaintiff can be acknowledged to have received KRW 828,246,575 from the defendant company on November 22, 2013 upon a provisional execution declaration of the judgment of the court of first instance on November 2, 2013. The quoted amount is 374,034,786 won, and the starting point of calculating delay damages for the above money is 454,211,789 won (i.e., 828,246,575 won, 374, 3784 and 25% interest rate from the date of provisional payment to the 25th day after the date of provisional payment.

5. Conclusion

Therefore, the plaintiff's principal claim against the defendant company and the plaintiff's claim against the defendant 2 are accepted within the scope of the above recognition. The plaintiff's remainder of the plaintiff's claim and the conjunctive counterclaim against the defendant company are dismissed as they are without merit. Since the part of the judgment of the court of first instance against the defendants ordering payment in excess of the above recognition amount is unfair in accordance with this conclusion, the part of the judgment of the court of first instance which affected the plaintiff's appeal which was partially accepted by the defendants and revoked it and all of the plaintiff's claim corresponding to the revoked part. The plaintiff's counterclaim claim against the defendant company, the plaintiff's appeal, and the remaining appeal by the defendants are dismissed as they are without merit. The defendant company's provisional payment claim is accepted within the scope of the above recognition, and

Judges Kim Jong-Un (Presiding Judge)