[1] Interpretation of penal provisions in accordance with the principle of no punishment without law

[2] In a case where the Defendant established a private futures trading site in which actual transaction tax information in the futures trading market is linked real time, and members deposited money into the Defendant’s account, stored electronic currency converted at a certain rate when they deposited money, and then operated the site in a manner that deducts fees each time they traded, and converted it into cash according to the original application rate when they were requested to exchange electronic currency, the case holding that punishment of the Defendant’s act for a violation of Article 44 subparag. 1 and Article 11 of the former Financial Investment Services and Capital Markets Act by running an unmanned financial investment business cannot be permitted in violation of the principle of no punishment without law

[3] The elements for establishing the crime of gambling as provided in Article 247 of the Criminal Code

[1] Article 12 subparag. 1 of the Constitution, Article 1 subparag. 1 of the Criminal Act / [2] Article 12(1) of the Constitution, Article 1(1) of the Criminal Act, Article 3(1) and (2), Article 4(10)5, Article 5(1), Article 6(1), (2), and (3), and Article 11, and Article 444 subparag. 1 of the Criminal Act / [3] Article 247 of the Criminal Act

[1] Supreme Court Decision 201Do7725 Decided August 25, 2011 (Gong2011Ha, 1993) / [3] Supreme Court Decision 2001Do5802 Decided April 12, 2002 (Gong2002Sang, 1193), Supreme Court Decision 2008Do3970 Decided October 23, 2008 (Gong2008Ha, 1639), Supreme Court Decision 2008Do10582 Decided February 26, 2009 (Gong2009Sang, 396)

Defendant 1 and one other

Defendants

Suwon District Court Decision 2012No4007 decided November 8, 2012

The judgment of the court below is reversed, and the case is remanded to Suwon District Court Panel Division.

The grounds of appeal are examined.

1. As to the violation of the Financial Investment Services and Capital Markets Act

A. After finding the facts as stated in its reasoning, the lower court determined that the goods traded on the “○○○○○○○” and “△△△△△△△△△△△” website (hereinafter “instant private site”) operated by the Defendants constituted derivatives that refer to contractual rights under each subparagraph of Article 5(1) of the same Act, linked to “basic assets,” which are “the risks that belong to economic phenomena, etc. and that can be calculated or assessed by price, interest rate, indicator, and unit in a reasonable and appropriate manner,” under Article 4(10)5 of the Financial Investment Services and Capital Markets Act (amended by Act No. 11845, May 28, 2013; hereinafter “former Financial Investment Services and Capital Markets Act”). The Defendants engaged in financial investment business by engaging in trading derivatives on their own account.

B. However, it is difficult to accept the above determination by the court below for the following reasons.

The principle of no punishment without the law requires that a crime and punishment shall be prescribed by law in order to protect individual freedom and rights from the arbitrary exercise of the State’s penal authority. In light of such purport, the interpretation of the penal law should be strict, and an excessively expanded interpretation or analogical interpretation of the meaning of the express penal law in the direction unfavorable to the defendant is not allowed as it is against the principle of no punishment without the law (see Supreme Court Decision 2011Do7725, Aug. 25, 201

Article 11 of the former Financial Investment Services and Capital Markets Act provides that "no one shall engage in financial investment business (excluding investment advisory business and discretionary investment business) without authorization therefor under this Act." Article 444 subparagraph 1 of the same Act provides that a person who engages in financial investment business (excluding investment advisory business and discretionary investment business) without authorization therefor (including authorization for changes) in violation of Article 11 shall be punished by imprisonment with prison labor for not more than five years or by a fine not exceeding 200 million won." Article 6 (1) of the same Act provides that "any act conducted continuously or repeatedly for the purpose of earning profits" means an investment trading business, investment brokerage business, collective investment business, discretionary investment business, and trust business" means an act conducted at a certain price or value of underlying assets purchased on its own account, including solicitation for issuance and underwriting of securities, or an offer for sale and purchase of such underlying assets at a certain price calculated on its own account, regardless of whose name the risks of acquiring such underlying assets are, or an offer for sale and purchase of such underlying assets at a certain rate calculated on its own account."

C. However, according to the reasoning of the judgment below and the records, ① the Defendants are provided with information on actual transactions through the so-called Home Rating System (HTS). The Defendants purchased a private HTS program that is linked real time by a program developer and provides screen similar to HTS of a securities company, and establish the site so that members of the site can receive the above HTS program. ② When members join the respective private site and deposit money into the accounts of the Defendants, they set aside electronic currency converted to the applicable rate of 00 members’ choice, and members are provided with the same electronic currency in accordance with changes in 200 derivatives through HTS. The Defendants are provided with information on futures trading at ○○○○○○ Securities Company’s 20th anniversary of the members’ request for the exchange of electronic currency, and the Defendants are not able to pay the same amount of money to each member’s ○○ Securities Company’s 20th Securities and Exchange, which is the result of this case’s investment risk.

Examining the above facts in light of the aforementioned legal provisions, although the object of trading by members at each private site of this case may be deemed to constitute financial investment instruments under the former Capital Markets Act, the act of investment trading business under the former Capital Markets Act is engaged in the business of selling, purchasing, issuing, underwriting, soliciting offers, offering, and accepting orders (hereinafter “sale, purchase, etc.”). The Defendants did not allow members to trade 200 gift indices actually conducted at the Korea Exchange while establishing and operating each private site of this case, but merely did not allow members to trade 200 gift indices in the course at the Korea Exchange. It is merely a mere fact that members provided services to make their own investment on the basis of their gift index and exchanged them according to their transaction results. Furthermore, the Defendants cannot be deemed to have committed acts such as selling, purchasing, etc. with their own members. Furthermore, even if there is a need to punish members who operate illegal financial investment business sites including the Defendants on the grounds that there is a need to deprive them of opportunities to acquire investment money or to realize profits by means of computer iceing, etc., such acts do not violate penal provisions under Article 414.

D. Nevertheless, solely on the grounds stated in its reasoning, the lower court readily concluded that the Defendants engaged in financial investment business by engaging in an investment trading business without obtaining authorization from the Financial Services Commission. In so doing, the lower court erred by misapprehending the legal doctrine on the operation of financial investment business by an unmanned under Articles 44 subparag. 1 and 11 of the Capital Markets Act. The allegation contained in the grounds of appeal on this point is with merit.

2. As to the remaining grounds of appeal

A. The crime of gambling opening under Article 247 of the Criminal Code is separate from the crime of gambling in which the crime of gambling is committed by one's own presiding official for the purpose of profit-making and by opening a gambling place under his control. The term "gambling" means that the participating party gets property and contests the acquisition and loss of property by an incidental acceptance. The term "for profit-making purpose" refers to the intention of seeking an illegal pecuniary benefit in return for opening a gambling place (see Supreme Court Decision 2001Do5802, Apr. 12, 2002, etc.).

Based on the adopted evidence, the lower court found the facts as indicated in its reasoning, and found the Defendant guilty of each of the facts charged on the ground that transactions via each of the private sites of this case through the private sites of this case are determined in accordance with future contingency results, such as price fluctuations, and such transactions themselves are speculative.

Examining the reasoning of the judgment below in light of the above legal principles and records, the above determination by the court below is just and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the scope of application of Article 10(2) of the Act and the recognition of illegality.

B. According to Article 383 subparag. 4 of the Criminal Procedure Act, an appeal on the grounds of unfair sentencing is allowed only in cases where death penalty, life imprisonment, or imprisonment or imprisonment without prison labor for more than ten years has been imposed. Thus, in this case where a minor sentence has been imposed against the Defendants, the argument that the amount of punishment is unreasonable is not legitimate grounds for

3. Conclusion

As seen earlier, the part of the judgment of the court below regarding the Defendants’ violation of each of the Capital Markets Act should be reversed in an unlawful manner. However, the court below found the Defendants guilty of both the violation of each of the Capital Markets Act and each of the violation of each of the said Act, and rendered a single sentence by deeming that the Defendants’ violation of each of the said Act constitutes a common concurrence relationship under Article 40 of the Criminal Act. Accordingly, the judgment of

Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Yong-deok (Presiding Justice)