The principal and interest on redemption, etc. 2010 Gohap27835

Attached Table 1 is as shown in the list of plaintiffs.

Domina Bank (Deuta Bank, AG)

December 15, 2011

January 12, 2012

1. The defendant shall pay 5% interest per annum to each of the plaintiffs listed in the separate sheet in the separate sheet in order to pay 20% interest per annum from September 1, 2009 to April 18, 201, and 20% interest per annum from the next day to the day of full payment.

2. The costs of the lawsuit are assessed against the defendant.

3. Paragraph 1 can be provisionally executed.

The same shall apply to the order.

1. Basic facts

A. On August 31, 2007, Korea Investment Securities Co., Ltd. (hereinafter referred to as "Korea Investment Securities") issued 289 'Korea Investment Securities Co., Ltd. (hereinafter referred to as the "Korea Investment Securities Co., Ltd.")' (hereinafter referred to as the "Korea Investment Securities Co., Ltd.") a single class of derivatives-combined securities (hereinafter referred to as the "Korea Investment Securities Co., Ltd.") and the main contents indicated in the prospectus are as follows:

-The name of the good: 289 Korean Investment Securities Additionals. 289

- For underlying assets: Samsung Electronic Common Shares, National Bank Common Shares 2)

- Total issue amount: 19.8 billion won

- Initial Base Price: Paper of each underlying asset on August 30, 2007 (Tsung Electronic Ordinary Shares 572,000, Common Shares of National Bank 74,600)

- Maturity: (Assigning the opportunity to repay automatically every two years and every six months) August 31, 2009

- The maturity valuation date: August 26, 2009 the closing price of underlying assets;

-Profit structure

(1) Automatic early redemption.

(i) Where the appraised value of two underlying assets on the date of the first automatic steering evaluation is not less than 90 per cent of the initial base price: 7.15 per investment rate;

(ii) where the appraised value of two underlying assets on the date of the second automatic steering evaluation is not less than 85 per cent of the initial base price: 14.3 per investment rate;

(iii) where the appraised value of two underlying assets on the date of the third automatic early redemption is not less than 80 per cent of the initial base price: 21.45 per investment rate;

(2) Repayment at maturity.

4) Where the maturity assessment price of the two underlying assets is not less than 75 per cent of the initial base price without automatic early redemption under the above-mentioned section 1-3: 28.6 per investment rate;

5) Where the automatic early repayment or maturity repayment under the above-mentioned (1)-4 does not occur, any of the two underlying assets is less than the maturity evaluation price [the first standard price x 75%) and any of the two underlying assets (including the middle) falls below the maturity evaluation price (the first standard price x 60%): the investment rate of 28.6%;

6) The automatic early repayment and maturity repayment under the above-mentioned 1-5 did not occur, [including any issue up to maturity, which has fallen below 60% of the initial base price) even if it falls under any category (including the middle) + [the maturity evaluation price is less than 75% of the initial base price] ? Principal loss ratio = (principal) 】 (the decline rate in any category of basic assets which has a large drop in width)

B. Korea Investment Securities shall pay a certain amount of redemption to investors who purchased the instant stock-linked securities, including the Plaintiffs, when the early redemption condition or maturity redemption condition of the instant stock-linked securities is satisfied. On August 30, 2007, Korea Investment Securities entered into a “stock-linked swap contract of the same structure as the instant stock-linked securities” (USD SPP stocks hereinafter referred to as “the instant swap contract”) with respect to the amount acquired by Korea Investment Securities through the issuance of the instant stock-linked securities between the Defendant and the Defendant, which is part of KRW 8.9 billion, out of KRW 19.9 billion, in order to avoid risks therefrom.

C. After that, the instant stock-linked securities led to August 26, 2009, which was the date of determining the maturity assessment (hereinafter “the base date of this case”) without fulfilling the redemption condition. At the time, there was no problem in meeting the redemption condition (572,000 won or more, which is 75% or more of the base price) since the instant stock-linked securities were formed at a much more than the base price (572,000 won), but there was no problem in meeting the redemption condition (54,00 won or more, which is 75% or more of the base price).

D. However, on August 24, 2009, the Defendant sold 75,000 common shares of KB financing, and 77,409 common shares of KB financing on August 25, 2009, respectively. On August 26, 2009, the base date of the instant case, sold 242,214 common shares of KB financing, and in detail, during the course of sale, sold 114,214 shares in total as shown in the table as listed below through the Do-type securities business unit, and sold 14,214 shares in total as listed in the table. From 14:500 to 15:00:00,00 shares (14:596,000,000 shares, 15:00 shares, 00 shares) through the branch of the EL securities Seoul, a single time period of sale to 14:5,000 shares (7:308 shares).

【Disposition】

A person shall be appointed.

A person shall be appointed.

E. As above, the share price (e.g., the conclusion price) was significantly lowered from 54,800 to 53,600 won with an order for sale of 96,000 common shares of KB financing at the same time as above, and the share price (e.g., the purchase price) fell from 54,800 to 54,500 won with an order for sale of 32,000. The final closing price of KB Finance Common shares as of the base date of the instant case was determined at KRW 54,740, which is the base price for redemption of the instant stock-linked securities, and ultimately, was determined at KRW 54,700, which is the base price for redemption of the instant stock-linked securities. Accordingly, the maturity redemption condition of the instant stock-linked securities was satisfied.

F. Accordingly, the Plaintiffs received only the money indicated in the column of “actual receipt” in the attached Table No. 74.9% of the investment principal from the Korea Investment Securities on August 31, 2009, which is the maturity date of the instant stock-linked securities.

G. Meanwhile, with respect to the stock-linked securities of this case, the Korea Exchange market surveillance committee deliberated on the Defendant’s trading and call price, and trading mode from August 20, 2009 to August 26, 2009 regarding the stock-linked securities of this case. As a result, it concluded that “the Defendant is presumed to have a high probability of operating the stock price by means of a large-scale market price (a large-scale market price below any specific price) to restrict the increase in market price due to the sale order of this case.”

[Ground of recognition] Facts without dispute, Gap 1 through 5, 7, 9, Eul 1, Eul 1 to 3, 7, and 8 (including partial number of evidence), each fact-finding with respect to the Chairperson of the Korea Exchange Market Monitoring Board, the purport of the whole pleadings

2. The parties' assertion

A. Summary of the plaintiffs' assertion

The Defendant, who entered into the instant swap contract with Korea Investment Securities, made KB Finance Co., Ltd. to form KRW 54,740,700, which is lower than the redemption price of KB Finance Co., Ltd., the underlying assets of the instant stock-linked securities, as of the instant base date. The Defendant’s act of selling stocks constitutes a market price manipulation under Article 176(4)38 of the Financial Investment Services and Capital Markets Act (hereinafter “Capital Markets Act”) or an unfair trading under Article 178(1)19 of the Financial Investment Services and Capital Markets Act (Article 178(1)38 of the said Act). However, the Defendant’s act of selling stocks constitutes an unfair trading under Article 70 of the said Act (Article 78(1)19 of the said Act). However, the Plaintiffs, who purchased the instant stock-linked securities, did not receive reimbursement of the amount equivalent to 128.6% of the investment principal when meeting the redemption condition of the instant stock-linked securities. Accordingly, the Defendant is liable for damages arising from such unfair trading under the Civil Act (Article 970).

B. Summary of the defendant's assertion

Financial institutions that issued the instant securities, such as the instant securities, avoid risks caused by the issuance of the securities, and manage risks caused by the fluctuation in the prices of underlying assets by trading the underlying assets of the ES using the financial method called “deel hedging” in order to secure the financial resources for the redemption of the ES. The Defendant also traded the instant securities with respect to the KB financial common shares, which are underlying assets, during the period prior to handling the instant securities in accordance with the deel hedging principle. In particular, on the instant base date, the Defendant sold the KB financial common shares owned while minimizing the impact on the stock price in accordance with the deel hedging principle. Accordingly, the Defendant’s above sale of stocks does not constitute market price manipulation or unfair trading under the Financial Investment Services and Capital Markets Act.

3. Determination

A. Determination on the cause of the claim (the part on the claim for damages caused by market manipulation)

(1) Whether the liability for damages occurred

As of the base date of this case, the Defendant sold KB Finance common shares, which are underlying assets of the stock-linked securities, in a large quantity, and as a result, did not meet the redemption condition of the stock-linked securities in this case. Accordingly, we examine whether the act was legitimate or not.

Generally, a transaction that artificially alters the market price of securities refers to a transaction that is likely to cause a fluctuation in the market price and trading volume to be formed in the free competitive market by involving other factors not attributable to the market factors according to the supply and demand of the securities, and even if the parties do not make a confession, such determination may be made by comprehensively taking into account indirect factors such as the nature of the securities and the total number of outstanding securities, the price and trading volume trends, the economic rationality and fairness of the transaction before and after, the transaction circumstances, the degree of market intervention rate, and the continuous closing management, etc. (see, e.g., Supreme Court Decision 2003Do4320, May 11, 2006).

6. On the 5th anniversary of the fact that the Defendant had a large-scale market share price of 0.5 billion won at the time of sale and purchase of the instant 40. The Defendant had a large-scale market share price of 0.5 billion won at the time of sale and purchase of the instant 40.4 billion won at the time of sale and purchase of the instant 40. The Defendant had a large-scale market price of 0.5 billion won at the time of sale and purchase of the instant 40.4 billion won at the time of sale and purchase of the instant 40.4 billion won at the time of sale and purchase of the instant 40.5 billion won at the time of 14.5 billion won at the time of 14.4 billion won at the time of 6.4 billion won at the time of 5 billion won, and the Defendant had a large-scale market price of 0.5 billion won at the time of sale and purchase of the instant 5 billion won and had a large-scale market price of 5.4 billion won at the time of sale and sale.

[Defendant asserted to the effect that there was no participation in the formation of a closing price since he/she works for the sale of KB Finance General Shares with an order of CD (Cre ful Disre), which shall be carefully ordered to trade orders at a single time to avoid an impact on the market price at the Seoul Branch. However, according to the Defendant’s request for sale of 128,000 shares at the end of 10 minutes prior to the expiration of the term, the fact that it does not affect the market price was made only in the form that it does not have an effect on the market price (the Defendant only sold 14:5:196,00 shares and sold 14:5:5:196,00 shares and sold 50 billion won at the 500,000,000 won at the 50,000,000 won at the 201,000,000 won at the 50,000,000 won at the 28,000,000.

(2) Scope of damages

Ultimately, the plaintiffs who purchased the stock-linked securities of this case due to the above market price manipulation or other equivalent acts were suffering from losses equivalent to the difference in the amount of redemption corresponding to approximately 74.9% of the investment principal already paid in the redemption amount corresponding to 128.6% of the investment principal agreed upon when the redemption condition is met. The defendant is obligated to pay to the plaintiffs the amount indicated in the "actual receipt amount" column of the "actual receipt amount of the attached Table" as compensation for damages, and the amount of the claim from September 1, 2009, which is the day following the due date of the contract redemption, to the plaintiffs from September 1, 2009 to September 18, 201, the delivery date of the copy of the application for change in the purport of the claim of this case and the claim cause of this case, and damages for delay at the rate of 20% per annum as stipulated in the Act on Special Cases Concerning the Promotion, etc. of Legal Proceedings from the next day to the date of full payment).

B. Judgment on the defendant's assertion

(1) The part on the claim that Article 176(4)3 of the Capital Markets Act does not apply to the stock-linked securities of this case

Article 176 (4) of the Financial Investment Services and Capital Markets Act provides that "any person shall not commit any of the following acts in connection with the sale and purchase of listed securities or exchange-traded derivatives," and subparagraph 3 of the same paragraph provides that "securities (A) linked to securities prescribed by Presidential Decree (C) shall be changed or fixed with the intention to make a third party gain unfair profit from the sale and purchase of listed securities or exchange-traded derivatives." Article 176 (4) 3 of the Financial Investment Services and Capital Markets Act provides that "securities (A)" and "securities (B)" and "securities (C)" and "securities (D)" are the same securities, and therefore, "securities (A)" and "securities (C) are not common securities" and "securities (C)" as "securities related to this case and are not related to the aforesaid common securities (C) securities."

[A] Even if the share-linked securities of this case do not correspond to the securities stipulated in Article 176 (4) 3 of the Capital Markets Act, the plaintiffs are claiming the liability for damages under Article 750 of the Civil Act, not the liability for damages under Article 177 (1) of the Capital Markets Act, which is premised on the application of the above provision. Thus, if the defendant's actions constitute market price manipulation or other acts corresponding thereto, they shall

(2) The part on the assertion that the act was a legitimate share transaction in accordance with the detona Hague principle

(A) The defendant takes over risks from the issuance of the instant stock-linked securities under the instant swap contract. The defendant asserts to the effect that, in order to manage its risks due to changes in the value of underlying assets and secure financial resources for repayment to investors, he has traded KB financial common shares in the underlying assets during the trading period, and on the reference date of the instant case, he sells KB financial common shares held in accordance with the above deel hedging principle. In particular, in accordance with the deel hedging principle, the deel value is finally determined at 0 o o o o o o o o o o o o o o o o o, the maturity redemption date of the EBS, the underlying assets of which are finally determined as the closing date of the underlying assets, the defendant sold all KB financial common shares held in the immediately preceding hedging transaction, so the defendant does not sell KB financial common shares with the intent to change the market value of KB financial market.12)

(B) In addition to the purport of the entire argument on the evidence as seen earlier, it is recognized that the financial institution that issued the instant ls is not only commonly used in domestic and foreign financial transactions in order to manage risks arising from the issuance of ESSs and secure financial resources for repayment to investors, but also is also a financial engineering corporation with the necessity of such transaction. It is recognized that the financial institution engaged in the sale or purchase transaction of KS, an underlying asset, in accordance with the deela hedging principle, in order to manage its risks arising from the issuance of the instant stock-linked securities from Korea investment securities and secure financial resources for repayment to Korea investment securities.

(C) On the other hand, in addition to the circumstances acknowledged in paragraph (a) above, even if the Defendant sold KB financial common shares, which are underlying assets, by taking full account of the overall purport of the arguments and the following circumstances, as a part of the risk-hedging transaction, it is difficult to conclude that the Defendant had no intent to change the share price of KB financial common shares, in view of the trends of the KB financial common share price and trading volume at the time, the transaction situation before and after the time, the Defendant’s market share ratio, the Defendant’s market share ratio, and the result non-performance of the redemption condition of the stock-linked securities of this case, and thus, it is difficult to conclude that the Defendant had no intention to change the share price of KB financial common shares. Accordingly, the Defendant’s above assertion is rejected.

In other words, even if the Defendant sold KB financial common shares, which are underlying assets, in large volume at the time of the instant base date, according to the deel Hague principle, risk-hedging transactions is ultimately conducted for the purpose of preventing loss incurred by the issuance of derivative financial instruments by financial institutions and ensuring the soundness in asset management. Since a financial institution with conflicting interests with investors determines the methods and methods under its own responsibility and judgment, it has a duty of care to avoid impeding the fair formation of underlying assets formed in the market according to the principle of demand and supply and under the principle of good faith so as not to undermine the investor’s legitimate interest and trust, as much as possible, and in particular, it is necessary to make transactions with the KB financial common share owner so as to avoid impeding the formation of the fair price of underlying assets in such a manner as to avoid impeding the fair formation of underlying assets under the principle of demand and supply.

② It is reasonable that a financial institution that issued the ls does not assume statutory and contractual obligations to solely engage in risk management due to the issuance of the ls and to secure financial resources for repayment to investors. Furthermore, it appears that the financial institution’s own development and implementation of risk management for the delta hedging risk management is nothing more than one method (i.e., the financial institution under the Capital Market Act bears risk management obligations through hedging to ensure soundness in asset management). However, the financial institution’s purchase or sale of underlying assets pursuant to the dela hedging principle cannot be deemed a legitimate act of the Defendant’s sale of KS ordinary financial instruments, solely on the ground that the financial institution engaged in the purchase or sale of underlying assets in accordance with the dela hedging principle.

③ The Korean Investment Securities notified investors who purchased the instant stock-linked securities that they may engage in risk-hedging transactions, such as trading of underlying assets and stocks, trading of derivatives, such as futures and options related to underlying assets, and over-the-counter derivatives transactions with other institutions. However, in detail, it did not notify investors that the KB Finance Co., Ltd. should sell all of the common stocks owned by the KB Finance Co., Ltd until the end of the base date of the instant case, in accordance with the detonism principle, in order to secure risk management due to a change in the value of underlying assets and funds for repayment to investors.

④ The Defendant asserts to the effect that the value of underlying assets held for hedging should be sold at the closing price of the ES maturity in order to offset accurately with the value of the ES, and that the underlying assets held for hedging should be sold at the closing price of the ES maturity. However, the Defendant’s assertion to the effect that the underlying assets held for hedging should be sold at the closing price of the ES maturity, regardless of the adequacy of the theoretical principle of the dele hedging, and that even if the price drops before the expiration of the contract, the Defendant’s assertion to the effect that the stocks held for hedging should be disposed of in excess of the quantity of stocks held without conditions, can distort the price by selling at the low price during the single closing price as of the maturity date.

4. Conclusion

Therefore, the plaintiffs' claim of this case is justified and it is so decided as per Disposition by the assent of all.

Judge Yellow-gu of the presiding judge

Judges Kim Yong-min

Judges Kim Jin-jin

1) The stock-linked securities are the kind of structural securities based on an index, bond, stock, etc., whose investment return is determined in connection with the price of a specific stock certificate or the price fluctuation of the stock price index.

2) Since the issuance of the instant stock-linked securities, the common owner of the national bank was changed to the common share of the KB finance following the stock exchange and transfer thereof.

3) The term “Hing” means an attempt to eliminate risks arising from changes in the prices of assets held or to be held by investors in the future. The purpose of the Hague is not to maximize profits, but to prevent losses arising from price changes.

4) Under such a swap agreement, the Korea Investment Securities purchased the same product from the Defendant without directly hedging the risk (risk) and instead exceeds the Defendant’s substantial responsibility for repayment. It is called White Tobak hedge. On the contrary, internal hedge itself made directly by the issuer against the goods identical with those sold by using stocks, bonds, and derivatives and made a hedge through counter-transaction. The Korea Investment Securities carried out 11 billion won, which is part of the amount acquired by the issuance of the instant stock-linked securities.

5) The 75% of the base price due to the adjustment of the maturity price following the offering of new shares with KB finance was 54,740 won. The common equity share price of KB finance was 53,800 won on August 20, 2009, which was immediately before the base date of the instant case, and 56,000 won on August 24, 2009, and 54,400 won on August 25, 2009.

6) According to the Korea Stock Exchange Business Regulations (Article 23) and the Enforcement Rule of the said Regulations (Article 35), the ten minutes from the end of the stock market to the end of the term shall be determined at the end of the term by comprehensively taking into account the quotation received, and the closing price shall be determined at the end of the term, and the closing price shall be concluded at the end of the term by a single unit price. As to the closing price determination of a single unit price, the principle of price preference is first applied between different orders, and the principle of time preference shall apply between the same price order and the same price order.

7) Items and quantities shall be designated in the form of an order that does not designate the price, and it refers to an order that intends to immediately trade at the price conditions that are most favorable at the present time or at the price formed in the market. Therefore, in general, the market price order is a trade contract in preference to the designated price order, and a conclusion is made in order from the other party order which takes precedence over the time when the total quantity of the order quantity is resolved, so the price decline can be effective.

8) Article 176 of the Capital Markets Act (Prohibition on Market Price Manipulation, etc.)

(4) No one shall commit any of the following acts in connection with trading listed securities or exchange-traded derivatives:

3. Causing a fluctuation in, or fixing, the market price of securities linked to certain securities prescribed by Presidential Decree with an intention to earn, or cause a third party to earn, unjust profits from trading such securities.

9) Article 178 of the Capital Markets Act (Prohibition on Unfair Trading, etc.)

(1) No one shall commit any of the following acts in connection with trading (including public offering, private placement, and public sale in cases of securities) or other transaction of financial investment instruments:

1. Using an unfair means, scheme, or trick;

10) The share of sales means the Defendant’s share of sales during the single temporary sales period for the total volume of sales during the single temporary sales period.

11) As long as liability for damages arising from market price manipulation is recognized, it is not separately determined whether the liability for damages arising from unfair trading, which is the cause of selective claims, arose.

12) Examining the Defendant’s assertion more specifically, the delta, as the financial institution that has issued the ES, is a financial engineering calculation of the fluctuation in the value of the securities, which is an underlying asset, and holds the shares in proportion to the ratio thereof through the sale or purchase of the shares, which are underlying assets. Such delta value is determined at 0 p.m. at 3 p.m. on the maturity date of the ES redemption date, the final redemption date of which is determined by the closing of the underlying asset (i.e., 0 p., e., e., e., e., e., e., e., e., e., e., the underlying asset). As such, the financial institution should sell all the shares, which are underlying assets held for hedge transactions immediately before.

13) Article 166-2 of the Capital Markets Act (Trading, etc. of Over-the-counter derivatives)

(1) Every investment trader or investment broker shall comply with the following guidelines in engaging in investment trading or investment brokerage business of over-the-counter derivatives:

2. The amount of risks from trading over-the-counter derivatives shall not exceed the limit prescribed and publicly notified by the Financial Services Commission;

3. Where net operating capital is less than twice the total risk amount, trade of new over-the-counter derivatives shall be suspended until the shortage is resolved and only business related to the liquidation of outstanding transactions or risk-hedging shall be conducted until the shortage is resolved;

5. Monthly trading of over-the-counter derivatives and details of trading of brokerage, intermediary, or agent shall be reported to the Financial Services Commission by the 10th of the following month.

자본시장법 제31조(경영건전성기준)

(1) A financial investment business entity shall observe the standards for soundness in management determined and publicly announced by the Financial Services Commission for the following matters in order to maintain soundness in its management, and shall establish and implement an appropriate system therefor:

4. Other matters prescribed by Presidential Decree as necessary for securing soundness in business management.

자본시장법시행령 제35조(경영건전성기준)

(1) "Matters prescribed by Presidential Decree" in Article 31 (1) 4 of the Act means the following matters:

1. Matters concerning risk management;

Financial Investment Business Regulations Article 3-42 (Risk Control System)

(1) A financial investment business entity shall establish a system for risk management, such as awareness, assessment, surveillance, and control of all risks arising from various transactions in a timely manner.

(2) Each financial investment business entity shall establish and operate a proper level of risk burden, transaction limit, etc. for each department, each transaction, or each product in order to efficiently control risks.

(3) Each financial investment business entity shall evaluate and manage various risks, such as market risks, operating risks, and liquidity risks that may arise from various transactions, by types.

14) According to the prospectus (Evidence A2) No. 1, May 3, 199, the issuer of this Policy stated as follows: “The issuer of this Policy may trade derivatives, such as trading of underlying assets, trading of futures and options related to underlying assets, and risk-hedging with other institutions, including non-residents, for the issuance of this Policy; hereinafter the same shall apply).” According to the “Operational Plan for Funds procured on February 2, 199,” the issuer of this Policy stated as “the plan to avoid risk in transactions, such as the purchase of options or the management of underlying assets and derivatives related to the issuance of this Policy, which are similar to the Securities in question, for the stable payment of redemption in accordance with the future terms and conditions of issuance.”

15) According to the deel Hague principle, as seen earlier, the ES maturity price does not cause any change in the value of the Els, and thus, the dedele value is zero, and all shares of the underlying asset should be sold.

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.