[1] The case holding that in case where a securities company, which issued and sold the stock-linked securities with the structure of which the obligation to redeem before maturity comes every four months from the purchase date of securities until the maturity date, was not determined as the closing date of the second interim evaluation date, and where the conditions for redemption before ten minutes have not been fulfilled due to mass sale of the stocks, which are its underlying assets, the investor can claim that the said conditions for redemption before the interim evaluation date were fulfilled

[2] The case holding that where there was an act that interferes with the fulfillment of the conditions of redemption before maturity or repurchase in violation of the good faith of a securities company before maturity redemption or repurchase based on the issuance and sale contract of stock-linked securities, the investor can assert that the conditions of redemption before maturity redemption have been fulfilled even after receipt of maturity redemption or repurchase money

[1] In a case where a securities company that issued and sold the stock-linked securities with the structure of which the obligation to redeem before maturity comes every four months from the purchase date of securities until the maturity date is determined as a closing date of the second interim evaluation date, and where the conditions of redemption before ten minutes have not been fulfilled due to mass sale of stocks, which are the underlying assets, the case holding that the securities company, which is the party to the contract, interferes with the fulfillment of the conditions of redemption before maturity against the trust and good faith, and that is the party to the contract, may claim that the conditions of redemption have been fulfilled on the above interim evaluation date, which would have been presumed to have been fulfilled if the securities company had no interference with the securities company

[2] The case holding that even if a securities company pays to investors the maturity redemption or repurchase amount under a contract for the issuance and sale of stock-linked securities, it is merely a performance of the obligation borne by the securities company with respect to the stock-linked securities on the premise that the redemption condition was not fulfilled, and thus, it cannot be deemed that the legal relationship under the contract with respect to the stock-linked securities was terminated including the redemption condition, or that the investors who purchased the securities have implicitly waivedly waived the right to claim the redemption amount, in case where there was a interference with the fulfillment of the redemption condition contrary to the good faith and good faith of the securities company before maturity redemption or repurchase, the investors can claim that the redemption condition was fulfilled even after receiving the maturity redemption or repurchase amount.

[1] Article 150 (1) of the Civil Act / [2] Article 150 (1) of the Civil Act

Plaintiff 1 and one other (Law Firm Hannuri, Attorneys Jeon Young-young et al., Counsel for the plaintiff-appellant)

Daewoo Securities Co., Ltd. (Attorney Hong-soo, Counsel for the defendant-appellant)

June 10, 2010

1. The defendant,

A. From March 2008, 226,882,838 won to Plaintiff 1 and its related amount:

B. As from January 24, 2008, Plaintiff 2, as well as from January 24, 2008:

By August 17, 2009, 6% per annum and 20% per annum from the next day to the day of full payment shall be paid respectively.

2. The plaintiffs' remaining claims are dismissed.

3. The costs of lawsuit shall be borne by the defendant.

4. Paragraph 1 can be provisionally executed.

The defendant shall pay to the plaintiff 1 26,907,233 won and the amount equivalent to 44,019,844 won and the amount equivalent to 6% per annum from January 24, 2008 to the service date of a copy of each complaint of this case, and 20% per annum from the next day to the day of complete payment.

1. Basic facts

The following facts shall not be disputed between the parties, or may be recognized by taking into account the respective descriptions of Gap evidence 1 through 4, 6 through 12 (including the number of each branch; hereinafter the same shall apply), Eul evidence 1, and the whole purport of pleadings:

A. The relationship between the parties

The Defendant is a securities company that issued the instant stock-linked securities (hereinafter “instant stock-linked securities”) with “the 195 PSDR new redemption type” (hereinafter “instant stock-linked securities”). The Plaintiffs are investors who purchased the instant stock-linked securities issued by the Defendant.

B. The plaintiffs' purchase of stock-linked securities of this case

On March 15, 2005, Plaintiff 1 purchased 42,000 shares of the stock-linked securities of this case (the par value of 10,000 won per sheet; hereinafter the same shall apply) from the Defendant for KRW 420,000,000, and Plaintiff 2 purchased 7,000 shares of the stock-linked securities of this case from the Defendant for KRW 70,00,000 on the same day.

C. Main contents of the stock-linked securities of this case

1. Title: The name of the securities 195 stock-linked securities (influencies of principal)

(ii) underlying assets: SamsungSDI common stocks listed on the Korea Securities and Futures Exchange;

(3) Payment date: March 16, 2005

(4) Dates: March 16, 2005

5) The base price determination date: March 16, 2005

6) Base price: SamsungSDI's closing price as of the base price determination date;

7) Interim Assessment Date: The following day shall be the Interim Assessment Date, and if the day is not the Exchange's business day, the following day shall be the Interim Assessment Date.

4 Month: July 18, 2005; 8 months: November 16, 2005; 12 months: March 16, 2006;

16 months: July 18, 2006; 20 months: November 16, 2006; 24 months: March 16, 2007;

28 Month: July 16, 2007, 32 months: November 16, 2007

8) Interim assessment price: SamsungSDRI’s closing price on the interim assessment date;

9) The redemption date before maturity: The following day shall be the redemption date before maturity, and if the relevant day is not a business day, the next business day shall be the redemption date before maturity.

4 Month: July 20, 2005; 8 months: November 18, 2005; 12 months: March 20, 2006;

16th month: July 20, 2006; 20th month: November 20, 2006; 24th month: March 20, 2007;

28 Month: July 19, 2007, 32 months: November 20, 2007

10) Date of maturity assessment: March 17, 2008

11) Maturity assessment price: SamsungSID common stock price on the date of maturity assessment;

12) The due date and payment date: March 19, 2008

13) Method of payment of the amount of redemption;

A) Redemption before maturity

If the interim evaluation price of an underlying asset is higher or equal than the base price or the price of the underlying asset is higher than 110% or more than the base price even if the interim evaluation date from the day following the date of determination of the base price to the relevant interim evaluation date falls short of 4,8,12, 16, 20, 24, 28, and 32 months after the issuance of securities, the defendant shall pay the following amount on the date of the redemption before the relevant interim evaluation date, and shall not be obliged to pay additional amounts:

- The redemption before maturity at the end of four months after issuance: Par value 】 [10% + 3%]

- The redemption period before maturity at the end of eight months after issuance: Par value 】 [10% + 6%]

- The redemption period before maturity at the end of 12 months after issuance 】 face value 】 [10% + 9%]

- The redemption period before maturity at the end of 16 months after issuance 】 face value 】 [10% + 12%]

- The redemption period before maturity at the end of 20 months after issuance 】 face value 】 [10% + 15%]

- The redemption period before maturity at the end of 24 months after issuance 】 face value 】 [10% + 18%]

- The redemption period before maturity at the end of 28 months after issuance 】 face value 】 [10% + 21%]

- The redemption before maturity at the end of 32 months after issuance: Par value 】 [10% + 24%]

b)Repaid;

Where redemption has not occurred before maturity, the defendant shall pay the following amount to the holders of the stock-linked securities of this case on the expiration date:

-where the maturity assessment value is higher than or equal to the base price, or where the value of the underlying asset has increased by at least 110 per cent of the base price, even once including the double value from the following day of the interim assessment of 32 months to the maturity assessment date, 127 per cent of the face value;

-if the maturity assessment value is less than the base price, and there is no difference between the 32-month interim assessment day and the 32-month interim assessment day and the maturity assessment day, at least 110% of the base price on one occasion, including the margin, and there is no difference between the following day of the base price and the maturity assessment day, at least 40% of the base price on one occasion: 100% of the face value;

- If the maturity assessment value is less than the base price, and there is no difference between the 32-month interim assessment day and the 32-month interim assessment day and the maturity assessment day, at least 110% of the base price on one occasion, including the long-term assessment day, and there is a difference of 40% or more compared with the base price even once from the day following the date of determining the base price to the maturity assessment day, the face value x (the base price / the

** In this case, the principal loss may occur, and the maturity evaluation price shall be less than the base price, and the loss shall be increased.

14) Repurchasing securities by the Defendant

The holder of the stock-linked securities of this case may request the Defendant to repurchase the stock-linked securities of this case on the 20th day of each month (the first exchange day that comes after the date of the issuance, if the relevant date is not an exchange) after the issuance. When an investor requests the re-purchase of the stock-linked securities of this case, the Defendant shall determine the price by considering the transaction status of risk (Hedgege) with respect to the stock-linked securities of this case, the price of underlying assets, market conditions, and other factors for pricing, and in such a case, he may incur loss to a certain portion of principal: Provided, That the Defendant may not comply with the re-purchase only if it is impossible to liquidate the market of the stock-linked securities of this case owned by the Defendant because the stock market and the bond-linked securities market are not operated normally.

(a) Date of the application for repurchase: 20th day of each month (the first business day of an exchange that arrives after the corresponding date if it is not a business day of an exchange);

(B) Method of application: Request in writing from the defendant branch to 4 p.m.

C) Re-purchase price: The amount calculated by the Defendant under the good faith principle on the basis of the liquidation value of the risk-hedging transaction (hedging transaction) as of the following day from the date of the date of application for re-purchase (the price calculation includes expenses, etc. arising from the difference in the purchase and sale price offered at the time when the Defendant liquidates the purchase and sale price, such as underlying assets, related futures and options, foreign currency, bonds, interest rate swap, etc. held by the Defendant for hedge, etc., and thus, can be different from the valuation amount of the stock-linked securities

(d) Date of payment: the date corresponding to three business days after the date of application for repurchase; and

D. The base price of the stock-linked securities of this case

On March 16, 2005, the base price of the stock-linked securities of this case, the closing price of SamsungSID Ordinary was KRW 108,500.

E. On November 16, 2005, the defendant's sale of SamsungSDI common shares

1) On November 16, 2005, the second interim evaluation date of the stock-linked securities of this case (the time eight months have elapsed after issuance), Samsung Ordinary Co., Ltd., an underlying asset of the stock-linked securities of this case, was traded at KRW 108,500, which is the base price, and was traded at KRW 108,500 or KRW 109,000 from around 12:00 of the same day to 10 minutes before the end of the transaction.

2) However, between 14:50 and 15:00, immediately before the end of the same day, the Defendant issued an intensive order to sell Samsung 134,000 common shares, which are the underlying assets of the stock exchange-linked securities of this case, through the product account (Account Number 9902220008) of the Defendant’s OTS derivatives department, and sold 86,000 shares among them. Ultimately, the above Samsung TSI common shares was 108,000 won on the same day.

본문내 포함된 표 주문시간 호가 수량(주) 직전가 직전대비 2005. 11. 16. 14:52:54 107,500 20,000 109,000 -1,500 2005. 11. 16. 14:53:10 107,500 8,000 109,000 -1,500 2005. 11. 16. 14:53:27 107,500 20,000 109,000 -1,500 2005. 11. 16. 14:54:11 107,500 6,000 109,000 -1,500 2005. 11. 16. 14:54:56 108,500 20,000 109,000 -500 2005. 11. 16. 14:55:40 108,500 20,000 109,000 -500 2005. 11. 16. 14:57:46 108,000 20,000 109,000 -1,000 2005. 11. 16. 14:58:48 108,000 10,000 109,000 -1,000 2005. 11. 16. 14:59:42 108,000 10,000 109,000 -1,000 ？ ？ 합계 134,000 ？ ？

(f) Payment of maturity or repurchase money;

1) On March 19, 2008, the maturity date of the share-linked securities of this case, Plaintiff 1 was paid KRW 280,645,161 with the maturity repayment from the Defendant.

2) Around January 2008, Plaintiff 2 requested the Defendant to re-purchase the instant stock-linked securities and received KRW 39,901,372 from the Defendant on the 23th of the same month.

2. Determination

A. Determination on the cause of the claim

1) When a party who is at a disadvantage due to the fulfillment of a condition interferes with the fulfillment of a condition against the good faith and good faith, the other party may assert that the condition has been fulfilled (Article 150(1) of the Civil Act). The time when the condition is deemed fulfilled is presumed to have been fulfilled if it had not been done against such good faith (see, e.g., Supreme Court Decision 98Da42356, Dec. 22, 1998).

2) Determination as to whether a party is the party at a disadvantage due to the fulfillment of a condition

According to the above facts, this case’s stock-linked securities is assessed as to the fulfillment of the conditions based on the price fluctuation in underlying assets every four months from the date of purchase until the maturity of 36 months, and ① the closing price of the above stocks on the evaluation date is at least the base price or at least 110% of the base price even if the conditions are met, including a long period until the evaluation date, and ② the redemption amount plus interest 3% of the base price increase at the face value as the principal, and ② the redemption amount equivalent to the face value as the principal, if the general value of SamsungSID as the underlying assets remains at least 60% to 110% of the base price without the fulfillment of the above conditions until the maturity of 36 months, and ③ the defendant is not obliged to pay the principal amount at a disadvantage to the purchaser of the above underlying assets, which is the structure of redemption at a disadvantage equivalent to the redemption price decline in the base price, and the defendant is not obliged to pay the purchaser of the above underlying assets as the redemption condition under the law, even if the above conditions were not fulfilled.

3) Determination as to whether it constitutes an act of interference against the principle of good faith

In light of the above-mentioned facts and evidence, ① the Defendant’s sales of Samsung 1’s underlying assets, which were sold to the general investors upon the price fluctuation of Samsung 1’s underlying assets during the interim period of 00,000 won, was 10,000 won and 10,000 won, and thus, was 10,000 won and 10,000 won and 10,000 won and 10,000 won and 10,000 won and 10,000 won and 10,000 won and 10,000,000 won and 10,00 won and 10,000 won and 10,000 won and 15,00 won and 10,00 won and 10,000,00 won and 10,000 won and 10,000 won and 10,00 won and more.

4) Sub-determination

Therefore, the defendant, who is the party to be disadvantaged due to the fulfillment of the conditions of redemption before maturity, sold SamsungSI's common shares, which are underlying assets, in bulk on November 16, 2005, which are the interim evaluation date, thereby hindering the fulfillment of the conditions of redemption before maturity against the good faith. Thus, the plaintiffs, who are the counter party, can claim against the defendant that the above conditions of redemption before maturity were fulfilled on November 16, 2005, which is the interim evaluation date, which is the interim evaluation date of November 16, 200

Therefore, the Defendant appears to have received 26,82,838 won (=45,20,00 won before maturity x (100% + 6%) x (20% after maturity 60% after the second day of the stock-linked securities x 60% of the outstanding redemption damages x 62,327,99 won per annum under the Commercial Act until March 19, 208 x 60% of the outstanding redemption damages x 60% of the outstanding redemption damages x 60% of the outstanding redemption damages x 206% of the outstanding redemption damages x 36% of the outstanding redemption damages x 40% of the outstanding redemption damages x 60% of the outstanding redemption damages x 40% of the outstanding redemption damages x 240% of the outstanding redemption damages x 60% of the outstanding redemption damages x 60% of the outstanding redemption damages x 36% of the outstanding redemption damages x 25% of the Plaintiff 26 and 4.

B. Judgment on the defendant's argument

1) Determination as to the assertion that there is no causal relationship between sale of stocks in large quantity and redemption condition before maturity

The Defendant asserts that there is no causal link between the Defendant’s mass sale of the stocks, which are the Defendant’s underlying assets, and the non-performance of the terms and conditions of the redemption before maturity on November 16, 2005, even if the terms and conditions of the redemption before maturity are not fulfilled on November 16, 2005, the second interim evaluation date, and thus, the payment before maturity can be made on the interim evaluation date at the later six interim evaluation date.

On November 16, 2005, which is the date of the second interim evaluation, there is no causal relationship between the defendant's interference and the non-performance of the conditions before maturity on November 16, 2005, even though the other conditions combined with the structure where several conditions are combined, and when the party who is at a disadvantage due to the fulfillment of the conditions interferes with the fulfillment of the conditions in violation of the good faith, the other party may at his option assert or not assert that the conditions have been fulfilled. Thus, without distinction as to whether other conditions attached to the share price linked securities of this case continue to exist valid, the plaintiffs may assert that the above second interim redemption conditions have been fulfilled by the defendant due to the obstruction of the defendant. Accordingly, the defendant's above assertion is without merit.

2) Determination as to the assertion that the fulfillment of conditions cannot be asserted upon termination of the legal relationship

A) The Defendant asserts that the legal relationship based on the stock-linked securities of this case was terminated upon the receipt by the Plaintiffs of the maturity redemption or repurchase amount, and that the redemption condition, which is a whole of the legal relationship arising from the stock-linked securities of this case, had already been terminated upon the termination of the above legal relationship. Thus, the Plaintiffs cannot claim against the Defendant that the conditions were fulfilled pursuant to Article 150 of the Civil Act due to the obstruction of the fulfillment of conditions contrary to the Defendant’s good faith.

B) On the other hand, among the obligations arising from the legal act regarding the issuance and sale of the stock-linked securities of this case, the Defendant fulfilled part of the obligation, and thus, does not extinguish the Defendant’s obligation to redeem before maturity based on the above legal act. Moreover, there is no limitation on the time when it can be asserted that the conditions have been fulfilled pursuant to Article 150 of the Civil Act on the ground that there was an interference with the fulfillment of conditions contrary to the good faith, and the time when the conditions have been deemed fulfilled is presumed to have been fulfilled if there was no act contrary to the good faith. Thus, among the conditions stipulated in the contract concerning the issuance and sale of the stock-linked securities of this case, if there was an act impeding the fulfillment of contractual conditions contrary to the good faith prior to such termination, the other party may assert that the conditions have been fulfilled even after the completion of the contract.

In the instant case, it is acknowledged as above that the Defendant paid the Plaintiffs with the maturity redemption or repurchase amount under the instant contract for the issuance and sale of stock-linked securities. However, this is nothing more than the Defendant’s performance of the obligation to pay the Defendant with respect to the instant stock-linked securities on the premise that the conditions for redemption have not been fulfilled. As such, the contractual relationship on the instant stock-linked securities, including the conditions for redemption before maturity, was terminated, or the Plaintiffs’ waiver of the right to claim the redemption before maturity cannot be seen as impliedly (the Plaintiff appears to have received the maturity redemption and repurchase amount under the circumstance that the Plaintiff did not close the acts hindering the fulfillment of the above conditions by the Defendant). Thus, in the event that there was an act of interference with the fulfillment of the conditions for redemption against the Defendant’s good faith before maturity redemption or repurchase, the Plaintiffs may claim that the redemption or repurchase amount paid on the premise that the conditions for redemption have not been fulfilled before maturity, even after receiving the maturity redemption or repurchase amount (which is reasonable to deem that it was partially appropriated by the Defendant’s fulfillment of the above conditions for redemption before maturity or repurchase).

Therefore, the defendant's above assertion is without merit.

3. Conclusion

Therefore, the plaintiffs' claims of this case are justified within the scope of the above recognition, and each remaining claims are without merit, and they are dismissed. It is so decided as per Disposition.

Judge Yellowified (Presiding Judge) For the highest number of hydrogens

Note 1) The year 2008 is leap year.