[1] The expression "in the information on facts falling under any of the subparagraphs of Article 186 (1) of the Securities and Exchange Act" refers to the expression "as to the information under Article 188-2 (2) of the Securities and Exchange Act

[2] Whether a bank's failure to raise funds is an important information under Article 188-2 (2) of the Securities and Exchange Act under circumstances where it is extremely certain that a bank will act as a failure to raise funds due to a default on its payment (affirmative), and whether a major shareholder, etc. of the corporation in question sells stocks by using the information before disclosing the information (affirmative)

[3] Criteria for determining whether the use of undisclosed information constitutes a subject matter of prohibition under Article 188-2 of the Securities and Exchange Act

[4] Where a person who has violated Article 188-2 (1) of the Securities and Exchange Act is punished by a fine pursuant to Article 207-2 of the same Act, whether the fact that the amount equivalent to three times the profit gained or the loss avoided by the violation exceeds twenty million won is part of the elements of a crime (affirmative with qualification)

[1] Article 18-2 (1) of the Securities and Exchange Act prohibits a certain person from using or allowing another person to use any material information that is not disclosed to the public in connection with the trading of securities of a corporation. Paragraph (2) of the same Article provides that "material information that is undisclosed to the public" means information that may have a significant impact on investors' investment judgment among information on facts, etc. falling under any subparagraph of Article 186 (1) and that is made before the relevant corporation disclosed to the public under the conditions as prescribed by the Ordinance of the Ministry of Finance and Economy. In defining "material information that is undisclosed to the public" in Article 188-2 (2) of the same Act, "any information on facts, etc. falling under any subparagraph of Article 186 (1)" is defined as "any material information that falls under any subparagraph of Article 186 (1) of the same Act, even if it is used in the expression, in light of the relevant provisions such as Article 186 (1) and (2) of the same Act, it shall be deemed as an important information that only falls under the material information prohibited use of undisclosed information.

[2] It is clear that not only when a listed company, etc. issued under Article 186 (1) 1 of the Securities and Exchange Act does not pay for any bills or checks, but also when a bank is able to have a significant impact on the management of the pertinent corporation because it was extremely difficult for it to raise funds due to its failure to pay for such bills or checks. If a reasonable investor is a reasonable investor, it shall be determined that the company has a significant value in determining the intent to trade stocks of the pertinent corporation. Thus, if a major shareholder, etc. of the pertinent corporation, etc., who knows such situation, sells stocks by using them before disclosing the information, such sale shall not be deemed to have violated Article 188-2 (1) of the Securities and Exchange Act

[3] Since Article 188-2 (2) of the Securities and Exchange Act provides that "any material information that has not been disclosed to the public" is "before the corporation concerned discloses it to many people under the conditions as prescribed by the Ordinance of the Ministry of Finance and Economy, such information is still subject to the prohibition of using undisclosed information under Article 188-2 of the same Act until it is disclosed by the corporation's will under the conditions as prescribed by the Ordinance of the Ministry of Finance and Economy."

[4] The proviso of Article 207-2 of the Securities and Exchange Act provides that where a person is punished by a fine who violates Article 188-2 (1) of the same Act, which prohibits the use of undisclosed inside information, if the amount equivalent to three times the profit gained or the loss avoided by the violation exceeds 20,000 won, the person shall be punished by a fine not exceeding the amount equivalent to three times the profit or the loss amount avoided by the violation. Thus, the fact that the amount equivalent to three times the profit gained or the loss avoided by the violation exceeds 20,000 won is part of the constituent elements

[1] Articles 186 (1) and 188-2 (1) and (2) of the Securities and Exchange Act / [2] Articles 186 (1) and 188-2 (1) and (2) of the Securities and Exchange Act / [3] Article 188-2 (2) of the Securities and Exchange Act / [4] Articles 188-2 (1) and 207-2 of the Securities and Exchange Act

[1] [3] Supreme Court Decision 93Do695 delivered on April 26, 1994 (Gong1994Sang, 1563) Supreme Court Decision 95Do467 delivered on June 29, 1995 (Gong195Ha, 2676)

Defendant

Defendant

Attorneys Lee Ho-con et al.

Seoul District Court Decision 2000No3689 Delivered on June 7, 2000

The appeal is dismissed.

1. In full view of the evidence duly adopted and examined by the first instance court, the lower court determined that the fact that the Defendant’s representative director of the non-indicted corporation (hereinafter referred to as the “non-indicted corporation”) who is the major shareholder of the Korean Han River Co., Ltd. (hereinafter referred to as the “Non-indicted corporation”) was aware that the disposition of default on payment of bills, etc. issued by the said Han River was inevitable, and that the stocks held by the said non-indicted corporation were sold from April 16, 1998 to April 23 of the same month (the payment was made from April 18, 1998 to the 25th day of the same month from the date of the above trade contract until the 3th day of the same month), and that the Defendant was made public through the final processing of the said stocks and the fact that the payment of default on bills, etc. issued by the said Korean Han River constitutes an act using undisclosed information in connection with the sale and purchase of securities.

2. Article 18-2(1) of the Securities and Exchange Act (hereinafter referred to as the “Act”) prohibits a certain person from using material information that is not disclosed to the public in connection with the trading of securities of a corporation or allowing any other person to use. Paragraph (2) of the same Article provides that "material information that is undisclosed to the public" means information that may significantly affect investors' investment decisions among the information on facts falling under any subparagraph of Article 186(1) and that may not be disclosed to the public under the conditions as prescribed by the Ordinance of the Ministry of Finance and Economy. In determining "material information that is undisclosed to the public" in paragraph (2) of the same Article, the term "any information that falls under any subparagraph of Article 186(1) of the Act" is defined as "any material information that is not disclosed to the public" and "any other person who has violated Article 186(1)1 through 13 of the Act shall be deemed to be in violation of Article 186(1)9 of the Act and thus, it shall be deemed that there is no significant error in the court's determination that it constitutes an important information that is 96.

In addition, Article 186 (1) 13 of the Act, which provides for one of the matters to be reported or disclosed by a listed corporation, provides that "the time when a fact prescribed by the President occurs, which has a significant impact on the management, assets, etc. of the corporation" other than subparagraphs 1 through 12 of Article 186 (1) of the Act, but each subparagraph of Article 186 (1) of the above Act is merely an example of "information that may have a significant impact on the decision of an investor", which is the standard for determining whether a listed corporation is a material information under Article 188-2 (2) of the Act, which is the standard for determining whether it is a material information under Article 188-2 (2) of the Act. In addition, it is clear that the above undisclosed information constitutes an important information under Article 188-2 of the Act, and it does not constitute an important information under Article 186 (1) 13 of the Act. Thus, the court below cannot accept the grounds for appeal to the effect that the act of punishment is clearly prescribed by the Presidential Decree or the Constitution.

In addition, Article 188-2 (2) of the Act provides that the "material information that has not been disclosed to the general public" is "before the corporation discloses such information to the general public under the conditions as prescribed by the Ordinance of the Ministry of Finance and Economy." Thus, until such information is disclosed by the corporation's will under the conditions as prescribed by the Ordinance of the Ministry of Finance and Economy, it still belongs to the information that is subject to the prohibition of using undisclosed information (see Supreme Court Decision 95Do467 delivered on June 29, 195). Thus, unless the Korean river itself has disclosed the fact that it is inevitable to disclose the fact that the fact that the failure to pay is inevitable, such fact alone cannot be said to be open to the general public. Accordingly, the grounds for appeal on this part cannot be accepted.

3. Meanwhile, the proviso of Article 207-2 of the Act provides that where a person is punished by a fine who violates Article 188-2 (1) of the Act which prohibits the use of undisclosed inside information, if the amount equivalent to three times the profit accrued or the loss avoided by the violation exceeds 20,000 won, the person shall be punished by a fine not exceeding the amount equivalent to three times the profit accrued or the loss avoided by the violation. Thus, the fact that the amount equivalent to three times the profit accrued or the loss avoided by the violation exceeds 20,000 won, is part of the constituent elements of the crime. However, according to the records, it is apparent that the defendant's profit accrued by the use of undisclosed information of this case or the loss avoided by the defendant exceeds 20,000 won (the loss amount avoided by the relevant provisions of the Securities Futures Commission is 1,123,377,400 won). Although it is not specified in the judgment of the court of first instance, it does not affect the conclusion of the judgment.

4. In light of the records, since the defendant can fully recognize the fact that he sells the shares of this case by using undisclosed information on his own will, there is no violation of the rules of evidence or misapprehension of the legal principles as to the use prohibited under the Securities and Exchange Act, as otherwise alleged in the ground of appeal.

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

Justices Yoon Jae-sik (Presiding Justice)