[1] The meaning of "information that may have a significant impact on investors' investment decisions" under Article 188-2 (2) of the former Securities and Exchange Act concerning the prohibition of using undisclosed information, and the time of creating such information

[2] The case holding that the information that a specific company is reviewing "the stock-listed retirement" in the manner of stock price support constitutes an "material information not disclosed" under Article 188-2 (1) of the former Securities and Exchange Act

[1] "Information that may have a significant impact on investors' investment decision" in Article 188-2 (2) of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, promulgated by Act No. 8635 of Aug. 3, 2007 and enforced Feb. 4, 2009), which is the criteria for recognition of "material information" under Article 188-2 (1) of the same Act refers to information that a reasonable investor considers to have an important value in making a decision on the transaction of securities when compared and assessing the importance of the information and the probability of the occurrence of the fact, among the facts that have a significant impact on the company's management, etc.

[2] The case holding that the information that a specific company reviews "the retirement of profits after the acquisition of a company's own shares" in the manner of the share price support constitutes an "material information which has not been disclosed" under Article 188-2 (1) of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, promulgated by Act No. 8635 of Aug. 3, 2007 and enforced Feb. 4, 2009) on the ground that it was sufficiently probable to realize the information in light of all circumstances, and its importance is also recognized.

[1] Article 188-2 (1) and (2) (see current Article 174 (1) of the Financial Investment Services and Capital Markets Act) of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, promulgated by Act No. 8635 of Aug. 3, 2007 and enforced February 4, 2009) / [2] Article 186 (1) 9 of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, promulgated by Act No. 8635 of Aug. 3, 2007 and enforced February 4, 2009) (see current Article 161 (1) 5 of the Financial Investment Services and Capital Markets Act), Article 186 (1) 1 and (2) (see current Article 174 (1) of the Financial Investment Services and Capital Markets Act)

[1] Supreme Court Decision 94Do2792 delivered on June 30, 1995 (Gong1995Ha, 2689) Supreme Court Decision 2003Do4320 Delivered on May 11, 2006 (Gong2006Sang, 1079) Supreme Court Decision 2008Do6219 Delivered on November 27, 2008 (Gong2008Ha, 1840)

Defendant 1 and two others

Prosecutor

Law Firm Jeongpon, Attorney Lee Jong-soo et al.

Seoul High Court Decision 2008No1552 decided Oct. 10, 2008

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

In full view of the adopted evidence, the lower court acknowledged that Defendant 1, who was in charge of the business of promoting the development of the identity and the business of managing shares from May 2003, 204, notified Defendant 2, an employee of the Dongyang General Financial Securities Company (hereinafter “instant information”), of the fact that, in its entirety, Defendant 1 informed Defendant 2, who was in charge of the business of promoting the enterprise development of the identity and the business of managing shares (hereinafter “original interest”) as the largest shareholder of the company for comprehensive development of identity (hereinafter “original development”), the largest shareholder of the company for comprehensive development of identity (hereinafter “original interest”), of the information that “the comprehensive development of new capital is reviewing the acquisition of shares by means of the stock price increase,” and determined that the information at that time does not constitute an “material information” under Article 18-2(1) and (2) of the Securities and Exchange Act, on the grounds that it is difficult to view that there was considerable probability or significant probability that the implementation of “the retirement of shares after the acquisition of treasury shares,” in its identity development at that time.

However, we cannot accept the above judgment of the court below for the following reasons.

"Information that may have a significant impact on investors' investment decisions" in Article 188-2 (2) of the Securities and Exchange Act, which is the standard for recognition of "material information" in Article 188-2 (1) of the same Act, refers to information that a reasonable investor considers to have a significant value in making a decision on the transaction of securities, in case where a reasonable investor makes a decision by comparing and assessing the importance of information and the probability of occurrence of facts in relation to the management, property, etc. of a corporation. On the other hand, it generally refers to an important information generated inside a corporation, not completed at once, and is concrete in the process of going through several stages. Thus, it is not deemed that a material information has been created only when such information is completed clearly and clearly and objectively from a reasonable investor, and if it has been embodied to such extent that it has a significant value in making a decision on the transaction of securities by comparing and assessing the importance and probability of occurrence of such information from a reasonable investor (see Supreme Court Decision 2008Do6219, Nov. 27, 2008).

According to the evidence and records duly adopted by the court below, Article 23 (1) 4 of the Securities Association Registration Rules, which was amended on September 5, 2003 and enforced on January 2, 2004, provides that the issue of management shall be designated as the item of "where the closing day of the common stocks of the Association-registered corporation continues to be less than 40% of its face value for 30 consecutive trading days". The shares for personal identity comprehensive development, which are the "Association-registered corporation" under the above provision, are 1,000 won, and the share price is less than 400 won continuously after January 2, 2004, and such circumstances were known to the stock market, and the comprehensive development of personal identity was attempted on June 2, 2003, and the comprehensive development was conducted on January 2, 200, and the comprehensive development was conducted on June 14, 200, which is the general development of the shares, and the comprehensive development of the shares for 140-year new development.

In full view of the following circumstances revealed in the above facts, namely, at the end of January 2004, the comprehensive development of the identity was an urgent situation to avoid the designation of the management issues; Defendant 1, an executive officer in charge of the management of shares, presented the method of “the retirement of profits from the acquisition of the shares after the acquisition of the shares; issued an order to prepare it; and there is no possibility that the said method and other measures will be adopted as the share price support method in the situation where the treasury stocks trust and the face value split failed; and thereafter, the said measures were adopted as the share price support method in the comprehensive development of identity. In addition, the said measures are highly probable at the time of the end of January 2004. In full view of the fact that the said measures were adopted as the share price support method in the comprehensive development of identity, it is recognized that the “self-stock retirement” is serious as information falling under Article 186(1)9 and Article 186(1)11 of the Securities and Exchange Act, an example of material nonpublic information.

Furthermore, the perception of the stock market and the fact that a company actually and specifically examines the method of stock price support in the inside of the company is different from the value of information. Thus, it is sufficient to consider the instant information as a decision-making data for the transaction of the comprehensive development stocks of identity, even though it was not finally determined as a means of stock price support from the inside of the comprehensive development of identity patrolmen in January 2004 to the method of stock price support, it is sufficient to consider the instant information as a decision-making data for the transaction of the comprehensive development stocks.

Thus, the information of this case was already created with material nonpublic information in January 2004 by Defendant 1’s delivery to Defendant 2. The judgment of the court below which determined otherwise is erroneous in the misunderstanding of legal principles as to “material nonpublic information” under Article 188-2(1) of the Securities and Exchange Act, which affected the conclusion of the judgment. The ground of appeal assigning this error is with merit.

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Ji-hyung (Presiding Justice)