Plaintiff 1 and 57 others

Defendant 2 Accounting Corporation (Law Firm Sejong, Attorneys Hong Scare-moo et al., Counsel for the defendant-appellant)

Anthical Co., Ltd. and one other

Defendant 1 (Law Firm Jeong, Attorneys Jeong Jong-sik et al., Counsel for the defendant-appellant)

September 15, 2006

Seoul Central District Court Decision 2003Gahap7160 Delivered on May 19, 2005

1. Of the judgment of the court of first instance, part of the judgment against the defendant 2 accounting corporation of the plaintiff 1 shall be modified as follows:

A. Defendant 2’s accounting firm pays to Defendant Posium Co., Ltd., Defendant 4, Defendant 1, and Plaintiff 1 the amount of money [Attachment 1] 619,040 won as indicated in the column for “amount 1,037,565 won” in the attached Table 1,037, and the amount of money calculated by each rate of 20% per annum from February 8, 2003 to November 3, 2006, and from the next day to the date of full payment.

B. The plaintiff 1's remaining claims against the defendant 2 accounting corporation are dismissed.

2. All appeals by the plaintiffs except the plaintiffs 1, by the plaintiffs excluding the plaintiff 1, by the defendant 2 accounting corporation excluding the plaintiff 1, and by the defendant 1 are dismissed.

3. The costs of appeal by the plaintiffs other than the plaintiffs 1 are borne by the above plaintiffs, and the costs of appeal by the above plaintiffs other than the plaintiff 1 by the defendant 2 accounting firm, by the above defendant 1, and the costs of appeal by the defendant 1 are borne by the above defendant, while the costs of appeal between the plaintiff 1 and the defendant 2 accounting firm are four minutes, which are borne by the plaintiff 1 and the remainder by the defendant 2 accounting firm

4. The portion ordering the payment of money under paragraph (1) (a) may be provisionally executed.

1. Purport of claim

The Defendants shall pay to each of the Plaintiffs the amount of money listed in the separate sheet 1 “amount of money requested”, and to each of the following amounts, 5% per annum from February 8, 2003 to the delivery date of a copy of the complaint of this case, and 20% per annum from the next day to the date of full payment.

2. Purport of appeal

The judgment of the court of first instance is modified as follows. The defendants pay to each of the plaintiffs the amount of money indicated in the "amount claimed" column of attached 3 【the amount claimed', and 5% per annum from February 8, 2003 to the delivery date of a copy of the complaint of this case, and 20% per annum from the next day to the date of full payment.

Defendant 2 Accounting Corporation: The part against Defendant 2 in the judgment of the first instance against the accounting corporation shall be revoked, and all of the plaintiffs' claims shall be dismissed.

Defendant 1: Revocation of the part against Defendant 1 in the judgment of the first instance, and all of the plaintiffs' claims are dismissed.

1. Facts of recognition;

The reasons stated in this part are as follows: "In addition, the defendant company did not state 1,924,00,000 won in foreign currency short-term loans and 2,519,000,000 won in foreign currency assets, and 8,023,000,000 won in outstanding bonds, which have occurred during the period of transactions with the non-party company 1, and 5,310,000 won in outstanding bonds, and 5,00,000 won in early bonds, and 10,000 won in early bonds." The defendant company did not state 10,000 won in its own account for 10,000 won in the above 10,000 won in the above 10,000 won in the above 10,000 won in the above 10,000 won in the above 20,000 won in the above 10,000 won in the above 10,014,01.

(3) The instant business report, including the instant financial statements prepared in falsity, was published to ordinary investors on March 31, 2001, and the instant audit report was published to ordinary investors on April 7, 2001.

2. Determination on this safety defense

The reason why a member should explain this part is the same as the corresponding column of the reasoning of the judgment of the court of first instance, except for correcting the "fact" of No. 13, No. 5 of the judgment of the court of first instance as "fact" as "fact". Thus, this part is cited in accordance with Article 420 of

3. Judgment on the merits

(a) Occurrence of liability for damages;

According to the above facts, the business report of this case and the audit report of this case contain false statements or indications as mentioned above, which may affect reasonable investors' investment judgment, and since the plaintiffs trusted that they were true and acquired the shares of the defendant company in the open market after the disclosure of the business report of this case and the audit report of this case and the audit report of this case, and they suffered losses from the decline in the stock price, the defendant company is the person who submitted the business report of this case, and the defendant 4 is the representative director of the defendant company at the time of the submission of the business report of this case, and the defendant 1 is the director of the defendant company at the time of the submission of the business report of this case, pursuant to Articles 186-5 and 14(1) of the Securities and Exchange Act, as the auditor of the defendant company, and the defendant accounting corporation is liable for damages suffered by the plaintiffs pursuant to Article 197 of the Securities and Exchange Act

B. Determination of the defendants' assertion

(1) The defendant accounting corporation's assertion and judgment

(A) Whether the defendant accounting corporation's cause was attributable

1) The assertion

The defendant accounting corporation asserts that, in the preparation of the audit report of this case, the matters to be entered in the tin on the tin capital does not constitute an important matter. Thus, even if the matters to be entered in the tin on the tin capital were omitted in the preparation of the audit report of this case, it cannot be deemed that the entry on the tin capital was omitted, ② it was not aware that there was a false entry in the business report of this case, ③ it was confirmed in relation to the parts of the min Capital Capital, and it was not negligent in performing the duties such as confirming the existence of tin capital by implementing the alternative audit procedure and confirming the existence of tin capital, and therefore, the liability for damages

(ii) the facts of recognition

In full view of the evidence Nos. 1 and 3, evidence No. 2-1, 2, 3, evidence No. 64, evidence No. 64, evidence No. 6-7, 11, 12, and 17, and the purport of the whole pleadings No. 6-1, and No. 9, the following facts may be acknowledged.

The Defendant’s accounting firm did not confirm the actual stock at the end of the period, although Nonparty 1 voluntarily released 712,370 shares out of the investment securities of the Defendant Company, and used Nonparty 1 as collateral for the loan of Nonparty 1 as collateral, etc., and the Defendant Company was not in possession of it as at the end of the period. However, the Defendant’s accounting firm did not confirm the actual stock, but did not confirm the actual stock of Nonparty 1’s “it shall be returned by May 31, 2001, but shall be repaid in cash by converting the above stocks into KRW 10,650 per the end of the period when the real asset falls short.” The Defendant Company did not indicate in the instant audit report that it was excessively appropriated as investment securities (However, in light of the fact that the Defendant Company temporarily removed the real asset provided as collateral and presented it to the Defendant’s accounting firm in the process of conducting an inspection on investment securities, it cannot be seen that it did not appear that the Defendant accounting firm failed to audit and inspection.

㉯ 피고 회사는 수출의 수익 인식을 선적일 기준으로 하고 있으므로 피티켑소닉에 대한 매출 중 2001. 1. 5. 선적된 매출 602,000,000원은 2001년 회계연도의 매출로 인식하여야 하는데도, 피고 회사는 이를 2000년 회계연도의 매출로 인식하여, 매출액 602,000,000원과 매출원가 356,000,000원을 과대계상하여 당기순이익 246,000,000원을 과다계상하였고, 피고 회계법인은 이 사건 감사보고서에서 이를 지적하지 아니하였다.

C. The Defendant Company did not state 1,924,00,000 won in foreign currency short-term foreign currency loans and 2,519,000,000 won in foreign currency short-term loans. The Defendant Company did not state 8,023,00,000 won in total and 5,310,000 won in the cancellation of the purchase price of the land remaining as end bonds, which were the proceeds of the purchase of the convertible bonds recovered, arising during the course of transactions with Nonparty Company 1, and 8,023,00,000 won in total. The Defendant Accounting Corporation did not state ever in the audit report of this case.

The so-called limited opinion is the opinion that the determination was suspended due to the failure to conduct an audit only for a specific part of the audit and inspection and that the remaining matters are inappropriate. On the other hand, the rejection of the opinion is not believed to be a whole of the company's financial statements, and its meaning or effect differs significantly from the limited opinion. The limited opinion presented in the audit and inspection report by the defendant accounting corporation was inappropriate for the remaining part of the audit and inspection of the inseminator which could have been discovered if the non-party 1 company, who is an investment company subject to equity law, obtained the financial statements of the company. However, in the audit and inspection report prepared as of March 21, 2002 by the defendant accounting corporation as of March 21, 2002, it was not possible for the defendant accounting corporation to conduct an inspection on the financial statements of the company's investment securities of the defendant corporation as of March 201. In light of the fact that the defendant accounting corporation failed to perform an appropriate audit and inspection procedure on the above investment securities of the defendant corporation and failed to present its opinion on the above financial statements.

3) Determination

Defendant accounting corporation entered false statements in the audit report of this case in a way that it does not take any measures to identify the possibility of illegality and error in the financial statements of this case while conducting the audit of this case. In addition, in the audit report of the financial statements of Defendant corporation in 2001, the actual investigation of the shares of the Defendant company was an important issue. The value of the shares of this case in the fiscal year of this case is KRW 8,910,000,000, which is 101,62,741,641 won as of December 31, 200, which is 101,62,741 won as of December 31, 200, which is 246,000,000 won for the net income of this case appropriated as the whole, and thus, it is reasonable to view that the remaining part of the audit report of this case constitutes an excessive net income of Defendant 1,200, 253,2539% of the audit report of this case.

(B) Whether there exists causation between window dressing accounting and stock acquisition

1) The assertion

The defendant accounting firm should have used the audit report in trust if a third party can claim damages from an auditor due to false statements in the audit report (Article 197 of the Securities and Exchange Act and Article 17(2) of the Act on External Audit of Stock Companies). After the audit report of this case where the defendant accounting firm stated limited opinions was disclosed on April 7, 2001, the defendant company announced about KRW 4.5 billion to the public on November 14, 2001, and in the case of the plaintiffs, the purchaser of the shares after the public announcement was made. In light of these circumstances, the plaintiffs asserted that the defendant accounting firm cannot claim damages against the defendant because they did not trust the audit report of this case and acquire the shares of the defendant company.

(ii) the facts of recognition

In the instant audit report, if the Defendant accounting firm obtained the financial statements audited by Nonparty 1, an investment company subject to the equity law, the company failed to conduct an audit of the inseminator's paragraph which could have been discovered. In full view of the purport of the entire pleadings in the statement No. 3-12 and No. 15, the Defendant company may recognize the fact that the Plaintiffs publicly announced the net loss of KRW 182,821,00 on August 16, 2001 through the second/4 quarterly report of the fiscal year of 2001, which was after the date of disclosure of the instant audit report, and publicly announced the net loss of KRW 4,512,312,00 on November 14, 2001 through the third/4 quarterly report of the fiscal year of 201, and where the Plaintiffs purchased the shares of the Defendant company, a considerable number of the Plaintiffs purchased the shares after November 14, 201.

3) Determination

On the other hand, in stock transaction, the financial status of the target company is one of the most important factors that form the stock price. An audit report prepared through an audit by an external auditor on the financial statements of the target company among the business reports of the target company revealing the financial status of the target company is provided and published to ordinary investors, and has a critical effect on the formation of the stock price. As such, a general investor who makes stock investments has a stock investment shall be deemed to have traded the stocks of the target company under the belief that the financial statements of the business report indicating the most well-known financial status of the target company and the audit report thereon are duly prepared and made public (see Supreme Court Decision 96Da41991 delivered on September 12, 197).

In light of the above legal principles, notwithstanding the quarterly loss report of the defendant company, the plaintiffs appear to have purchased the shares of the defendant company with the full trust of the audit report of this case and the basis of investment judgment. The above facts alone are insufficient to conclude that the plaintiffs acquired the shares with the knowledge of false entries in the audit report of this case in the purchase of shares after the public disclosure of the defendant company, and there is no other evidence to find otherwise. Thus, the above assertion by the defendant accounting corporation is groundless.

(2) Defendant Company and Defendant 4’s assertion

The reason why a member of the Committee is to explain is as stated in the corresponding column of the reasoning of the judgment of the court of first instance, except for the deletion of the “Agreement on the Waiver of Rights” (No. 16), No. 17) to the “Agreement on the Waiver of Rights” (No. 18), and therefore, it is cited as it is by Article 420

(3) Defendant 4’s assertion

The reasons for this part are as stated in the corresponding column of the judgment of the court of first instance. Therefore, the reasons for this part are cited in accordance with Article 420 of the Civil Procedure Act.

(4) Defendant 1’s assertion and determination

(A) The argument

Defendant 1: (a) around December 200, the above Defendant decided to transfer the management rights and shares of the Defendant Company to Nonparty 2, etc.; (b) held a temporary general meeting of shareholders on December 28, 2000 in accordance with the agreement to appoint Defendant 4 as a representative director and actually transferred the management rights; (c) concluded a share acquisition agreement with a regular meeting of shareholders on January 28, 2001 and thereafter did not participate in all the management of the Defendant Company thereafter; (d) was unaware of the false entry in the instant business report; (b) was not negligent in not knowing that the false entry was made; and (c) was not present at the board of directors to make a false entry or indication in the instant business report; and (d) was not present at the board of directors to make a resolution to make a public announcement of the instant business report; and therefore, (e) the provisions of Articles 401, 399(2) and (3) of the Commercial Act

(B) Determination

① We examine the assertion, and Article 186-5 and Article 14(1) of the Securities and Exchange Act provide that the person liable for compensation shall not be liable for damages if he proves that he could not know that there was a false entry in the business report, etc. even though he had paid considerable attention.

However, financial statements under the Commercial Act are required to obtain the approval of the board of directors, and directors have the duty to supervise the performance of their duties as members of the board of directors, the above reasons alleged by Defendant 1 cannot be deemed to have fulfilled their duty of due care, and there is no evidence to support that the above defendant could not be aware of false facts even if he fulfilled his duty of due care. Thus, the above defendant's above assertion is without merit

(2) On the argument, the above reasons alleged by the defendant 1 alone cannot be deemed to have a reasonable ground for failure of the above defendant to make a false entry or indication in the business report of this case and make a resolution to disclose the business report of this case. In addition, Article 401 (1) of the Commercial Act provides that where a director neglects his duties due to bad faith or gross negligence, he shall be jointly and severally liable for damages to a third party. Articles 401 (2) and 39 (2) and (3) of the Commercial Act provide that where a director commits an act in violation of Acts and subordinate statutes or the articles of incorporation or neglects his duties, the director who consented to the resolution of the board of directors is also liable for damages to a third party. If such an act is conducted by the resolution of the board of directors, the director who participated in the resolution of the board of directors shall be presumed to have consented to the resolution. Thus, the above defendant's assertion shall not be applied by analogy to the liability for damages under Articles 186-5 and 14 (1) of the Securities and Exchange Act.

C. Scope of damages

(1) Scope of stock transactions with causation

(A) Restrictions on the scope of transactions

Where a defendant company acquires the shares of the defendant company after the business report or audit report of this case was announced publicly, it is reasonable to deem that the above shares were traded by trust and on the basis thereof, unless there are special circumstances

However, the time when the business report of this case was published was March 31, 2001. The time when the audit report of this case was published was about April 7, 2001, and the date when the audit report of this case was published officially on October 24, 2002, which points out the false statement of the financial statements and the false statement of the audit report of this case, as well as the date when the Financial Supervisory Service's supervision results and measures were published officially. Thus, the plaintiffs purchased the shares of this case with the knowledge that the business report of this case and the audit report of this case were false around October 24, 2002.

Therefore, the damages caused by the false disclosure of the instant business report shall be limited to the damages caused by the stock transaction, which was acquired from March 31, 2001, which was the date of the publication (the defendant company and its representative director, the defendant 4, the defendant 1 who is the director), and the damages caused by the false disclosure of the instant business report from April 7, 2001, which was the date of the publication (the claim against the defendant accounting corporation), until October 24, 2002, respectively.

(B) Determination as to the defendants' assertion

The reasons for a member's explanation in this part are as follows: 3-1 of the judgment of the court of first instance is added to the following 20th of the judgment of the court of first instance, 20th of the 20th of the 20th of the 20th of the 21th of the 21th of the 21th of the 21th of the 21th of the 21th of the 21th of the 21th of the 3-2th of the 19th of the 19th of the 2

③ Defendant 1 asserts that there was no causal link between the false disclosure of the instant business report and the Plaintiffs’ damages on September 11, 2001, on the following grounds: (a) the part of the Plaintiffs’ disposal of shares prior to the publication of the false entry of the instant business report did not affect the share price of the Defendant Company; (b) the rapid aggravation of the economic situation, such as terrorism, etc.; (c) the conversion of the Defendant Company’s enemy into the company; and (d) the large-scale hostile publication on November 14, 2001.

③ As to Defendant 1’s assertion, comprehensively taking account of the overall purport of the arguments in the health account statement, Gap’s evidence Nos. 4 through 63, and Eul’s evidence No. 3 (including various numbers), the Defendant Company continued to decline on Oct. 24, 2002 prior to the rapid increase of the net income from February 2/4th of the year 2001, and such fact continued to have been published in the second half of the year 2001, and the Defendant Company was refused to express its opinion from the auditor on the financial statements included in the business report for the fiscal year 2001. This fact was reported by the media on Mar. 23, 2002, and the Defendant Company’s share price fell on Oct. 24, 2002. The Defendant Company’s share price fell on the day prior to the announcement of the company’s window dressing accounting statement as above, and thus, did not have any influence on the Defendants’ share price conversion as well as its share price increase.

(2) Calculation of damages

(A) The principle of calculating damages

(1) Method of calculation

Under the current securities deposit and settlement system, when a specific securities are deposited at the Korea Securities Depository, it cannot be specified as being mixed with other securities of the same kind. Thus, in the case of selling and buying deposited securities, the seller or the purchaser does not specify the securities which are the purpose of the sale and purchase, and does not specify the type, issue, and quantity of the securities and make a transaction by designating only the type, issue, and quantity of the securities. Therefore, whether the stocks acquired by the Plaintiffs are disposed of or not is bound to specify the disposal stocks in accordance with the purport of Article 15 of the Securities and Exchange Act, which is statutory amount of damages for the protection of investors. The method can be deemed to be a method by which the stocks acquired first among the stocks owned by the Plaintiffs are first disposed of by the method by which the stocks acquired first are first disposed of, and thus, it is not unreasonable to deem the first acquired stocks to be first disposed of. Therefore, in

2) Damages

① Claim against the Defendant Company and the Defendant 4 and 1 (damage caused by false publication of the instant business report)

The damages for which the plaintiffs can claim compensation against the above defendants due to the false disclosure of the business report of this case are limited to the damages for the share transaction they acquired during the period from March 31, 2001 to October 24, 2002. The specific details of damages by each plaintiff are as follows: the plaintiff and the "amount of damages" column stated in the "name" column of the attached Table 2 "Name" column of the attached Table 2.

(2) Claim against the defendant accounting corporation (damage caused by false disclosure of the audit report of this case)

The damages for which the plaintiffs can claim damages from the false disclosure of the audit report of this case to the defendant accounting corporation are limited to the damages incurred from the plaintiffs' share transaction during the period from April 7, 2001 to October 24, 2002. The specific details of damages by each plaintiff are as follows: the plaintiff and the "amount of damages" column stated in the "name" column of the attached Table 2 "Name" column of the attached Table 2.

[Reasons for Recognition] Each entry of Gap evidence Nos. 5 through 63 (including each number), the purport of the whole pleadings

(3) Limitation of liability

According to the above facts, the plaintiffs acquired the shares of the defendant company without fault when they acquired the shares of the defendant company at the time of acquiring the shares of the defendant company, and it was revealed that the financial status of the defendant company was different from that of the defendant company's disclosure, and that the sale of shares was delayed even if the share price continuously lowered after the purchase of the shares of the defendant company. Such negligence of the plaintiffs affected the occurrence and expansion of damages. Thus, the calculation of damages should be taken into account, and it is not consistent with equity to impose the same liability on the defendant company, the defendant company directly involved in the window dressing accounting of the financial statements of this case, the defendant company, the defendant 4, the defendant 1, and the window dressing financial statements of this case after the after-sale of the financial statements of this case. Considering all the circumstances revealed in the arguments of this case, it is reasonable to limit the amount of damages suffered by the plaintiffs and 20% of the share price suffered by the defendant company, and it is difficult to readily conclude that the plaintiffs' disposal of shares and the price of the shares of the defendant company's corporation's stock price decrease.

(4) Specific cited amount

The amount of award for each plaintiff shall be as stated in the column of "the amount of tolerance 1" in the attached Table 1 for the defendant corporation, defendant 4, and 1, and as stated in the column of "the amount of tolerance 2" in the same Table for the defendant accounting corporation.

4. Conclusion

Therefore, the plaintiffs, the defendant company, and the defendant 4 and 1's "the amount of discount 1" stated in the separate sheet of "the amount of discount 1" of each of the plaintiffs, and 5% per annum under the Civil Act from February 8, 2003 to May 19, 2005, which is the date the judgment of first instance is rendered by the plaintiffs, and 20% per annum under the Act on Special Cases concerning the Promotion, etc. of Legal Proceedings from the next day to the date of full payment, and the damages for delay shall be paid at 10% per annum under the separate sheet of "the amount of discount 2" out of each of the above amounts of the defendant company, the defendant 4, 1 and 1, and each of the above amounts shall be dismissed from February 8, 2003 to the defendant 1, and the remaining part of the plaintiffs' appeal shall be dismissed with the exception of the plaintiffs' remaining damages for delay 20% per annum of each of the above judgment of the court of first instance to the court of first instance.

[Attachment]

Judges Lee Jung-hun (Presiding Judge)