A case recognizing liability for damages against a customer in case a securities company has become a so-called red account (tentatively named tin-open account) because it has not made an opposing trade at the time.

If a securities company notifies a customer of the shortage of collateral and notifies that it will dispose of collateral stocks in the absence of additional collateral after the maturity period of the customer’s credit transaction loans, it shall be clearly and specifically approved and executed the liability for the opposite transaction. Thus, the securities company is obligated to compensate the customer for damages equivalent to the amount of outstanding collateral due to the default of the obligation, if the securities company, who manages the entrusted assets of the customer, disposes of collateral stocks until the maintenance ratio at least is less than 100 per cent in the preceding act. Thus, if the securities company fails to perform this obligation, and if the so-called red account (tentative-open-open-open-type) account remains to be disposed of in excess of the outstanding credit transaction loans even after the lapse of the maturity period of the customer’s credit transaction, as a person who manages the entrusted assets of the customer, becomes liable for the foregoing default of the obligation.

Article 390 of the Civil Act, Article 49 of the Securities and Exchange Act, Articles 16 and 17 of the Regulations on Credit Extension by Securities Companies

Dok Securities Company

Floodline

1. The defendant shall pay to the plaintiff 4,468,508 won with 19% interest per annum from October 13, 1990 to the day of full payment.

2. The plaintiff's remaining claims are dismissed.

3. 1/2 of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant.

4. Paragraph 1 can be provisionally executed.

The defendant shall pay to the plaintiff 8,937,015 won with 19% interest per annum from October 13, 1990 to the day of full payment.

1. Facts without dispute;

The following facts are not disputed between the parties:

In other words, on May 23, 1989, the defendant set up an account for credit transactions at 108533. The specific procedures, methods, interest rates, etc. related to credit transactions, Enforcement Rules of the Securities and Exchange Act, and provisions on credit extension by securities companies. After that, on January 9, 190, the defendant purchased shares by 13% per annum after the due date and 19% per annum after the due date of repayment. However, on June 7, 1990 (in Korea Stock Exchange, the date of settlement of the purchase price of shares was 108533.10, the due date of the above settlement was 106.10,000 won per annum 90,000 won per annum 90,000 won per annum 97,000 won per annum 190,000 won per annum 90,000 won per annum 196,000 won per annum after the due date of credit purchase.

2. The defendant's assertion

The plaintiff asserts that the defendant is not obligated to pay the above interest rate of 19% per annum, which is overdue interest rate from October 13, 1990 to the date of full payment, as the ground for the claim in this case, that the defendant is not obligated to pay the above interest due to the following reasons. In other words, according to the provisions on credit extension of a securities company, a securities company is obligated to conduct the counter-transaction if a credit transaction loan is not paid within the due date of repayment or the total amount of the secured value is less than 130% under the above provisions. The total amount of the secured value of the above credit transaction loan exceeds the above credit transaction loan even after the due date of repayment of the above credit transaction loan. Thus, since the total amount of the secured value of the defendant at the expiration date of the above credit transaction loan exceeds the above credit transaction loan, even if the plaintiff securities company could be sufficiently able to pay the credit transaction loan if there was the counter-transaction of the plaintiff securities company, even if the above opposing stock company continued to drop, the defendant is obligated to pay the above damages to the defendant.

3. Judgment on the defendant's assertion

(a) Various Acts and subordinate statutes concerning the extension of credit of a securities company;

Article 49 of the Securities and Exchange Act

(1) Any securities company may extend credit in connection with securities as lending money or securities to a customer.

(2) The Committee (referring to the Securities Management Committee established under Article 118 of the Securities and Exchange Act) shall prescribe the provisions concerning the limit, the ratio of collateral and the method of collection, etc. with respect to the extension of credit under paragraph (1).

Regulations on Credit Extension by Securities Company

Article 1

The purpose of this Regulation is to prescribe necessary matters concerning the limit of credit extension, collateral ratio and method of collection, etc. in case any securities company provides customers with loans or securities in connection with securities in accordance with Article 49 (3) of the Securities and Exchange Act.

Article 11

(1) When a securities company is entrusted with credit transactions from customers, it shall set up a credit transaction account. In such cases, the securities company shall not set up a credit transaction account for a customer for whom three months have not passed since the establishment of an account in accordance with the terms and conditions of entrustment contract determined by the Exchange.

Article 13

(1) Securities which a securities company may conduct credit transactions shall be stock certificates designated as part of the Exchange market: Provided, That stock certificates issued by a corporation whose listed capital is less than one billion won and a securities company shall be excluded herefrom: Provided, That stock certificates issued by a securities company shall not be subject to the credit transaction, loan or credit transaction substitute stock certificates for stocks issued by it.

(2) The Committee may, if deemed necessary, suspend a new credit transaction with respect to the items of credit transaction under paragraph (1).

(3) Where the items of credit transactions fall under any of the following subparagraphs, new credit transactions shall be suspended:

1. When the Exchange has designated items subject to supervision;

2. Where the Exchange takes measures for prepayment or water supply prepayment prior to the sale and purchase evaluation; or

(4) No new credit transaction business shall be conducted when the credit transaction items designated by the Commission become subject to the change of affiliated parts to the second issue of the Exchange market.

Article 14

(1) The credit transaction limit by credit transaction category shall be as follows, and the Committee shall vary by issue:

1. Credit transaction loans: 20% of the number of listed stocks in the relevant item;

2. Credit trader: 10% of the number of listed stocks in the relevant item.

(2) The ceiling on credit transactions and loans and credit transaction substitute ceiling of a securities company shall be as follows:

Provided, That where the chairperson of the Committee deems it necessary, he/she may adjust it within the extent.

1. Total limit by securities company;

(a) Financing of credit transactions: 150% of the equity capital of the relevant securities company; and

(b) Credit trader: 50% of the equity capital of the securities company concerned; and

2. Maximum limit to the same person by securities company;

(a) Loans for credit transactions: 50 million won;

(b) Credit trader: 20 million won;

3. 10% of the maximum limit on credit transactions, loans and credit transactions by type of securities company referred to in paragraph (1) 10% of the limit by issue of credit transactions;

Article 15

(1) In being entrusted with credit transactions, a securities company shall collect an amount not less than the amount calculated by multiplying the volume of transactions ordered by a trustor by the designated price (if there is no designated price, the current price), multiplied by the rate of credit transaction deposit, at the time of being entrusted with such transactions.

(2) The ratio of credit transaction deposit referred to in paragraph (1) shall be the minimum of 40%, and the chairperson of the Network may change the ratio or change the ratio by issue.

Article 16

(1) In granting a credit transaction loan, a securities company shall collect the purchased stocks and in offering a credit transaction substitute for the former, from the person concerned as security.

(2) When the total amount of security (including credit transaction deposits and substitute securities) value (hereinafter referred to as "security ratio") equivalent to a certain ratio of the amount of the relevant credit transaction loans or the amount of the relevant credit transaction substitute market price due to a fluctuation in the market price of stocks sold or substitute securities with the stocks sold or substitute securities with the purchase of credit transaction loans, falls short of the fixed ratio (hereinafter referred to as "fixed ratio of security"), a securities company shall collect additional security without delay.

(3) The collateral holding ratio referred to in paragraph (2) shall be 130% of the amount equivalent to the amount of credit transaction loans or the market price of credit transaction substitute.

(4) In calculating the collateral holding ratio under paragraph (4), the assessment price of stocks purchased by means of credit transaction loans and stocks sold by means of credit transaction substitute stocks shall be the closing price on the preceding day, and the assessment price of substitute securities shall be the substitute price.

Article 17

(1) In any of the following cases, a securities company may dispose of securities at will and appropriate them for recovery of claims:

1. When a credit transaction loan or credit transaction substitute stock price has not been repaid within the repayment period;

2. When, if the total amount of the values of the security falls short of the ratio referred to in Article 16 (4), the truster concerned demands the late payment of security and fails to comply with the late payment of security within four days from the date of such demand;

(2) The request for additional payment of securities under paragraph (1) 2 shall be made by means of a document proving the fact of such request, such as content-certified mail (Provided, That in cases of Article 17 (1) 1 of the previous Regulations due to a partial amendment of the provisions on credit extension of a securities company on September 20, 1990, the securities company shall dispose of the securities on the following day and appropriate the securities for recovery of claims)

Article 19

The repayment period of credit transaction loans and credit transaction comparison shall be within 150 days from the date of receiving a loan or a lender.

Article 20

(3) Where a credit transaction loan is not repaid on the due date, a securities company may collect overdue interest from the overdue date to the repayment date, and where the interest on the credit transaction loan has not been paid on the due date, the securities company may collect overdue interest from the overdue date for one month from the overdue date to the due date for the interest on the credit transaction loan after one month from the overdue date.

Article 21

(1) Securities companies shall submit daily data on credit transactions and other credit transactions to the Association as prescribed by the Korea Securities Business Association (hereinafter referred to as the "Association").

(2) Where a securities company violates the credit transaction limit under the provisions of Article 14, the Association shall report the details of such violation to the Director of the Securities Supervisory Service without delay.

B. Change in securities markets related to the defendant

(Evidence: Evidence of No. 3-1 through 9, evidence of No. 4, evidence of No. 11-1 through 12, evidence of No. 12-1 through 3, 13-1 through 10, 14-1 through 10, 15-1 through 12, 16-1 through 3)

The comprehensive stock price index of the Korean securities exchange was recorded about 900 points, which was difficult for the Defendant to extend credit transactions on January 10, 1990, but was recorded about 800 points, which was difficult on June 7, 1990, which was the date of credit delivery, and recorded about 600 points which was difficult to do so on October 10, 1990, and around 333% increase rate.

Meanwhile, the current status of the Defendant’s transaction account from January 9, 1990 to October 10, 1990 after the Defendant offered credit transaction loans is as shown in the attached Table 1 to 4. In summary, the Defendant’s transaction account was 19,405,854 won at the time of credit transaction loans, and the net assessed value of the Defendant’s transaction account was 19,405,854 won at the time of credit transaction loans, and the net assessed value was 9,574,357 won at the time of credit maturity on June 7, 1990 (i.e.,, if the Defendant disposed of the immediate stock without delay, it would be 9,574,357 won while the Defendant repaid the credit transaction loans and was able to repay the credit loans, and was unredeemed at the time of the opposing transaction on October 10, 1990.

C. Measures of Plaintiff Securities Company before the counterclaim

(Evidence: Evidence No. 8-1 to 3, 9)

The plaintiff securities company did not repay a credit transaction loan after the maturity date and when the ratio of collateral maintenance pursuant to Article 16 of the Regulations on the Credit Extension of Securities Company was less than 130% due to the stock price. From June 30, 1990 to September 3 of the same year, the plaintiff securities company notified the defendant of the above shortage of collateral (the ratio of collateral maintenance to July 14, 1990, which is above 100%) by content-certified mail, and did not offer a security falling short of 130% within the grace period of 4 days (the amount less than 130% under the Regulations on the Credit Extension of Securities Companies). The plaintiff securities company notified the defendant that it will dispose of the collateral stock (if the wording of the above content-certified mail is transferred as it is, it will be as follows.) If the incidental revenue did not pay it within the due date, then it made a voluntary appropriation of the collateral amount to the defendant by 10% prior to the expiration of 190% prior to the sale price.

D. Determination

The securities market is the rule of capitalism and the core of market economy order that supports the economy of a country by raising capital from various economic entities by raising capital from a company. The share price has a constantly changing characteristic, and the securities investment has a reason to actively protect and foster the investment risks despite the inherent investment risks, to the extent that it does not properly predict the share price. Therefore, investors participating in the securities market should be protected by what is the investment motive or what is the investment motive, and to this end, the State has provided institutional devices to take supervision, sanctions, and guidance by the Securities and Exchange Act and the Securities Management Commission.In particular, since the credit trading among securities investment is the most speculative element and the investment risk is the largest, the State imposes various obligations on securities companies to strictly regulate the investment risks.

First of all, Article 16 of the Regulations on Credit Extension of a Securities Company and Article 17 of the Voluntary Liquidation of Security shall be deemed to be applicable. According to the above provisions, if the ratio of collateral stock after a credit transaction loan is less than 130%, a securities company shall demand an additional collateral without delay to the truster, and if a credit transaction loan has not been repaid within the due date or if there is no additional payment for a truster's security, a securities company may dispose of the collateral at will and appropriate it for recovery of the claim (However, Article 17 of the Regulations on Credit Extension of a Securities Company revised on September 20, 190, provides that if a credit transaction loan has not been repaid within the due date, the securities company shall dispose of the collateral on the following day).

위와 같은 규정의 입법취지를 알아보기 위해서는 상환기일이 지나거나 담보유지율에 못미치는 계좌가 증권시장에 미치는 영향과 위탁자에게 미치는 영향을 헤아려 볼 필요가 있다. 담보유지 비율에 못미치는 계좌는 자칫 신용거래융자금의 전액상환이 불능해져 위탁자가 부족금액을 증권회사에 별도로 지급하지 아니하는 한 결국 금융기관의 일종인 증권회사를 부실하게 할 우려가 있으며, 상환기일이 지난 거래계좌 역시 언제 주가가 하락하여 담보유지비율에 못미칠지 알 수 없으므로 이 역시 담보유지비율이 못미치는 계좌와 마찬가지이다. 또한 이러한 거래계좌는 주가가 조금만 오르더라도 증권시장에 매물로 쏟아져 나올 가능성이 많은 이른바 악성매물로 화하여 주가하락시에는 증권시장의 회복을 막는 걸림돌이 된다. 그리고, 증권시장에 참여하는 다른 투자자들은 항상 신용거래융자잔고 현황을 염두에 두어 신용거래융자에 의하여 매수된 주식은 당연히 그 상환기일 안에 상환되거나 처분될 것을 전제로 하여 거래를 하게 되는데 그와 같은 전제가 달라지는 경우에는 증권시장의 수급 불안으로 예측하지 못한 피해를 입을 가능성이 많다. 위와 같은 가능성은 악순환의 고리를 이루고 상승작용을 일으켜 만약 증권시장의 모든 신용거래계좌가 위와 같은 악성매물을 품은 계좌로 된다면 전체의 증권시장은 순식간에 파멸의 구렁텅이로 빠질 수밖에 없게 된다. 바로 이와 같은 상황이 현실로 나타나 1990.9.경 우리나라 증권시장은 약 1조원의 미수금 및 미상환 신용거래융자금 때문에 증권회사들이 엄청난 자금 압박으로 증권시장을 안정시킬 수 있는 기관투자가로서의 기능을 완전히 상실하고 종합지가지수가 연초보다 약 40%하락하는 연중최저치를 기록하였다가, 1990.10.10. 위와 같은 미수금 및 신용융자 미상환금 중 약 1천억 원 어치의 매물이 정리된 후 별다른 호재 없이도 불과 보름만에 약 33% 상승한 것은 위와 같은 악성 매물이 증권시장에 끼치는 위력을 실감하게 한다.

On the other hand, in light of the truster's position, even if there is a low investment experience in the case of a low price of stocks purchased through a large credit transaction due to a decline in the stock price of the stocks purchased through a large credit transaction or when the redemption period has expired, if the stock price falls short of 100% due to the decline in the stock price, it cannot be said that it is difficult to dispose of the secured stocks by itself and if the secured ratio falls short of 100% due to the decline in the stock price (it can be said that there is a large number of investment risks than a cash transaction, but the situation where an investor in a credit transaction is up to the securities market to bear a large amount of investment risks rather than an investment risk in the transaction account, and the situation where it is difficult to cover the repayment of a credit transaction loan up to a separate amount from the investment amount in the transaction account can be said to be a large amount of loss due to the continuous stock

In addition, compared with the position of the securities company and the truster who is the customer, if the securities company has full discretion in conducting the counter-transaction against the trading account or the trading account whose redemption date falls short of the above collateral holding ratio, as above, if the securities company has a full discretion in conducting the counter-transaction, as above, the securities company does not bear any responsibility for minimizing the loss of the customer as an institution investment price, which is much more than one of the securities experts than the customers in all aspects, such as investment information about securities investment or investment techniques, even under the circumstances where the investment risk is more realistic than the customer, and even if it does not minimize the loss of the customer due to the timely counter-transaction, even in the case of the so-called red account, the secured value even for the customer who is the customer, even on the sole ground that the secured value is below his own responsibility, the securities investment may take place at any time after the expiration of the redemption period, regardless of such investment result, so that the agreement within the redemption period of the securities company in accordance with Article 9 of the Regulations on Credit Extension has a higher annual interest rate than 13% than 19%.

In light of the above circumstances, the legislative intent of Articles 16 and 17 of the Regulations on Credit Extension by a securities company is to prevent a securities company from sustaining the function of an institutional investor and from harming the entire securities market where the securities market in which the securities market is supporting the national economy as it goes beyond the scope of the investment principal due to the insolvency of a securities company and the loss of investors exceeds the scope of the investment principal due to the transaction account where the transaction account was created which falls short of the maintenance ratio of the securities company's collateral and the transaction account where the outstanding credit transaction loan was created, on the premise that the securities company has a duty to perform the opposite transaction within a reasonable period of time, with respect to the transaction account where the securities company is not required to pay additional security and the transaction account where the outstanding credit transaction loan was created.

Therefore, in this case, as long as the Plaintiff securities company notified the Defendant of the shortage situation (at that time, the secured ratio exceeded 100%) and notified the Defendant of the disposal of the secured stocks when there is no additional security payment until July 14, 1990 after the maturity period of the credit transaction loan expires, the Plaintiff securities company clearly stated that it will approve and implement the above obligation to sell the secured stocks, and that it will execute it more specifically. Thus, the Plaintiff securities company has a duty under the good faith to prevent losses in excess of the customer’s entrusted assets by disposing of the secured stocks until the secured ratio is less than 100% under the good faith to prevent losses in excess of the customer’s entrusted assets until the secured ratio becomes less than 10% under the good faith principle. Accordingly, since the Defendant’s transaction account’s collateral ratio is more than 100%, it cannot be said that the Plaintiff securities company’s failure to perform this obligation has not yet incurred losses to the Defendant until the secured stocks were additionally disposed of (the above losses are equivalent to 8,937, and 150.

However, as long as the repayment date of a credit transaction loan has expired, there was a negligence by negligence, as a matter of course, in accordance with the agreement at the time of the establishment of the original credit transaction account, even though there was a primary responsibility to repay a credit transaction loan or dispose of secured stocks at an appropriate time. Such negligence by the defendant is the cause of the above damage, but it does not reach the degree of exemption from the liability of the plaintiff securities company, so it is only considered in calculating the amount of damages. However, it is reasonable to determine that the plaintiff securities company is liable to compensate 1/2 of the amount of damages suffered by the defendant, 1/2 of the amount of damages suffered by the defendant, 4,468,

Therefore, according to the defendant's expression of set-off, if the defendant's damage claim of KRW 4,468,507 is offset against the equivalent amount of KRW 8,937,015 against the claim claim of this case of the plaintiff securities company, the remainder is 4,468,508 (=8,937,015-4,468,507).

4. Conclusion; and

Therefore, the plaintiff's claim is legitimate within the scope of Paragraph 1 of the Disposition, and it is so decided as per Disposition.

[Attachment Omission]

Judge Lee Hong-chul