[1] The case holding that, in case where Party A, who was a party to a fund transaction and the subject to whom the related financial assets accrue, are the nominal owner of the relevant account, where the fund account was opened and managed together in the name of his/her family members by contributing the entire funds, and the fund account was redeemed

[2] Details and degree of the duty of explanation to be borne by officers and employees of the bank that sold investment trust certificates to customers when soliciting purchase of beneficiary certificates

[3] In a case where Party A’s bank employees emphasized only the safety and profitability of the fund and solicited Party B to purchase the fund without properly explaining the risk that principal loss may occur at the operating method or maturity, the case holding that Party A’s above act constitutes an unfair solicitation, and thus, Party B is liable for damages such as Party B, etc.

[1] The case holding that in a case where Party A contributed funds in full to the fund and managed the entire account alone until the fund account is opened and redeemed in the name of his family members, there must be an express agreement between a financial institution and a fund contributor, etc. to vest in financial assets in the fund contributor, and the party to the fund transaction and the subject to whom the relevant financial assets belong, which consists of a family name account, should be the nominal owner of the relevant account in case where Party A, other than the nominal owner following the real name verification procedure

[2] When an executive officer or employee of a bank who engages in the business of selling beneficiary certificates pursuant to Article 26 of the former Indirect Investment Asset Management Business Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635 of Aug. 3, 2007) solicits customers to purchase beneficiary certificates, he/she has a duty of care to protect customers by clearly explaining the characteristics and major contents of the pertinent beneficiary certificates, including the risks associated with investment, so that customers may make reasonable investment decisions based on such information. When a loss occurs to customers as a result of the violation of such duty of care, tort liability liability is established. In this case, the degree of explanation to the customer should be determined by comprehensively taking into account the characteristics and risk level of the pertinent beneficiary certificates,

[3] In a case where Party A’s bank employees emphasized only the safety and profitability of the fund and solicited Party B to purchase the fund without adequately explaining the risk that principal loss may occur at the operating method or maturity, the case holding that Party A’s above act constitutes an act of hindering Party B’s proper awareness of the risk resulting from investment or an act of inducing transaction involving excessive risk in light of the investment situation and an unfair solicitation of Party B, and thus, Party A’s bank is liable for damages suffered by Party B, etc. due to Party B’s occupational tort (However, considering Party B’s negligence, the liability for damages is limited to 35%)

[1] Article 105 of the Civil Act / [2] Article 750 of the Civil Act, Article 26 of the former Indirect Investment Asset Management Business Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635 of August 3, 2007) / [3] Articles 396, 750, and 763 of the Civil Act

[2] Supreme Court Decision 2008Da52369 decided Nov. 11, 2010 (Gong2010Ha, 2227)

Plaintiff 1 and five others (Law Firm Jeong, Attorneys Lee Jae-soo et al., Counsel for the plaintiff-appellant)

1. The term “the term “the term” means “the term” means “the term” means “the term” means “the term” means “the term in which the term is used.

March 9, 2011

The defendant shall pay to the plaintiff 1 170,854,803 won, the surrounding plaintiff 2 19,434 won, the surrounding plaintiff 3,4,851 won, each of 21,356,851 won, the surrounding plaintiff 64,070,551 won, and the rate of 5% per annum from January 21, 201 to March 23, 201, and 20% per annum from the next day to the day of complete payment.

The remainder of plaintiffs 1, 2, 3, 4, 5, and 6 and the conjunctive claims of plaintiffs 1 are all dismissed.

3/5 of the costs of lawsuit shall be borne by the plaintiffs, and the remainder by the defendant.

Paragraph (1) may be provisionally executed.

1. Claim of the plaintiff 1 and the primary plaintiff 2, 3, 4, 5, and 6

The defendant shall pay to the plaintiff 1 490,640,00 won, 55,810,300 won, 3,4,000 won, 61,30,000 won, and 183,990,000 won to the plaintiff 6, respectively, and 5% per annum from the day following the delivery of a copy of the complaint of this case to the day of the pronouncement of the judgment of this case, and 20% per annum from the next day to the day of full payment.

2. The purport of the conjunctive plaintiff 1's claim

The defendant shall pay to the plaintiff 1 423,790,300 won with 5% interest per annum from the day after the copy of the complaint of this case is served to the day when the decision of this case is rendered, and 20% interest per annum from the next day to the day of full payment.

1. Purchase and loss of the Fund

A. Purchase of the Fund

On December 1, 2006, upon Nonparty 1’s recommendation, the site location of the Defendant Bank’s Busan Law Korea branch, Plaintiff 1 opened six accounts in his own name, including one of the two accounts in his own name and one of the other Plaintiffs’ names, respectively. Plaintiff 1 opened 80 million won in his own name, 91 million won in the former address, and 10 million won in the former address, and 30 million won in the name of Plaintiff 3, 4, and 5, each of Plaintiff 6, each of whom was 80 million won in the former address, and 30 million won in the name of Plaintiff 6, each of whom was 1.49,100 won in total (hereinafter referred to as “instant account”, and the remaining accounts of the Plaintiffs except Plaintiff 1, referred to as “family account”).

B. The structure of the Fund

The instant fund, which was entrusted by the Defendant Company, is an investment trust seeking profits accrued from price increase by investing most part of the trust property in over-the-counter derivatives under the former Indirect Investment Asset Management Business Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635, Aug. 3, 2007; hereinafter “the Indirect Investment Asset Management Business Act”). The OTC derivatives invested by the instant fund is linked to the yield on the stock value of five items in the table of underlying asset column. The details are as follows:

(2) In the event that the first base price is less than 5% of the total value of underlying assets during the pertinent quarter, 14.5% per annum for each quarter (3 months): In the event that the first 5% of the total value of underlying assets is less than 55% of the base price during the pertinent quarter, 3.625% of the base price for redemption (14.5% per annum), 3.6% of the first 5% of the total value of underlying assets (2.5% of the first 5% of the decline in redemption) due to the decline of less than 5% of the initial base price during the pertinent quarter, 14.5% of the total value of underlying assets as of December 4, 2006, 206.

(c) Occurrence of losses;

The Defendant Bank paid KRW 216,251,427 to Plaintiff 1 for the first one year after opening the account (the amount indicated in the dividend column below). However, due to the influence of the financial crisis that occurred since November 2007, the Plaintiff Bank, one of the underlying assets of the instant fund, fell into USD 55 per cent of the first stock price ($ 35.75 U.S. dollars) around January 2008, resulting in the likelihood of principal loss due to the decline of the common stock price of Costbucks in USD 19.31, which is less than 55 per cent of the first stock price ($35.75).

After maturity, no profit accrued for the second year period after opening the account due to the decline in the share price. Plaintiff 1 redeemed all the funds related to the account of this case on December 11, 2008 immediately after maturity, and received the amount indicated in the column for the redemption price: (a) the fund purchased with the account of this case was incurred by 75.5%; and (b) the principal loss amount corresponding to 61% of the principal amount was incurred in consideration of the dividends paid once each year. This is as follows: (a) the Plaintiff asserted that the final principal loss amount was the amount indicated in the column for the principal loss amount (i.e., the total principal loss amount paid once per year, but there is no evidence to acknowledge that the amount exceeding the following amount recognized by the Defendant).

Plaintiff 180,00,00,000 195,813, 139, 116,030, 281, 843, 420 48,156, 580, 291, 270, 27413, 198, 435, 472, 5775, 5277, 527, 827, 813, 3100, 2064, 2079, 3064, 207, 4768, 964, 197, 197, 197, 194, 197, 197, 196, 194, 197, 196, 196, 206, 207, 3064, 2075, 3684, 1975

[Reasons for Recognition] The facts without dispute, Gap 1, 3, 6 evidence, Gap 4, 5, 7 evidence, Gap 8, 14 evidence, Eul 1-6 evidence, Eul 23 evidence, witness non-party 1's testimony and the purport of the whole pleadings

2. A person to whom a family name account belongs;

A. Summary of the issue

With respect to who is the party to the fund transaction and the subject to whom the relevant financial assets accrue, the Plaintiffs asserts that the nominal owner is the actual subject to whom the relevant financial assets accrue. Defendant Bank asserts that the subject to whom the said rights accrue is Plaintiff 1, on the grounds that the total amount invested in the name of a family account is the money of Plaintiff 1, the entire amount invested in the name of a family account was managed independently from the opening to the redemption of the account, and the account was thoroughly kept confidential.

B. Legal principles on the determination of financial transaction parties

The Act on Real Name Financial Transactions and Confidentiality enacted for the purpose of this purpose is to establish a real name verification procedure to determine the parties to a financial transaction and clarify the attribution of financial assets therefrom, and accordingly, it has to undergo the real name verification procedure prior to the financial transaction.

In financial transactions, such as the accession of the instant fund, the identity of the transaction party and the subject to which the relevant financial assets are attributed, in principle, ought to be determined on the basis of the nominal owner objectively indicated through the real name verification procedure. If other fund contributors, etc. are to be designated as the transaction party, there must be an express agreement between the financial institution and the fund contributors, etc. to vest in the financial assets. Such agreement ought to be strictly recognized based on specific and objective evidence with the clear probative value sufficient to reverse the probative value of the agreement, etc. prepared through the real name verification procedure (see Supreme Court en banc Decision 2008Da45828, Mar. 19, 2009).

C. Facts of recognition

Plaintiff 1 held 4.8 billion won, including land compensation to be received as a result of redevelopment, and upon Nonparty 1’s investment solicitation, entrusted Nonparty 1 with it, and opened a series of investment products, including the instant fund, and opened 30 accounts including the instant account, part of the Plaintiff 1 himself/herself, and part of the account was under the name of the remaining Plaintiffs, who are their family members.

Plaintiff 1 opened a family name account in the form of one’s behalf for the rest of the Plaintiffs, along with his resident registration certificate, submitted a certified copy of the family register indicating the remaining Plaintiffs’ resident registration numbers and family relations to the Defendant bank, and completed the real name verification procedure. Such real name verification procedure was conducted in accordance with the relevant provisions except for Plaintiff 2 (see, e.g., Supreme Court Decision 200Do328, Apr. 1, 200). Meanwhile, Plaintiff 1 submitted a separate account for two separate accounts under Plaintiff 6’s name and completed the real name verification procedure (No. 9, No. 13-2).

Plaintiff 1, who had the idea to divide part of the compensation to the family, filed a gift tax on the opening of the family name account with Nonparty 1 and imposed the gift tax accordingly. However, Nonparty 1 demanded Nonparty 1 to keep the remainder of the Plaintiffs confidential without notifying the other Plaintiffs of the opening of the instant account, and managed the entire account alone. Therefore, the rest of the Plaintiffs did not know the fact.

[Reasons for Recognition] In without dispute, Gap 1, 3, and 6 evidence, Gap 8-9, Gap 9, Eul 13-2, 3, Eul 1-6 evidence, Eul 13-2, Eul 21 evidence, Eul 22-5-7, non-party 1's testimony and the purport of the whole pleadings

D. Determination

In this case, Plaintiff 1 opened a family name account in the name of the remaining plaintiffs in the capacity of proxy and went through a real name verification procedure as required by the Enforcement Rule of the Act on Real Name Financial Transactions and Confidentiality. Furthermore, in light of the fact that Plaintiff 1 paid gift tax to a considerable amount of money and opened an account in the name of the other plaintiffs, even though there are no circumstances to do so, Plaintiff 1 was able to contribute the entire amount of the funds, and demanded Nonparty 1 to manage the entire account alone until the opening and redemption of the account, and without notifying the other plaintiffs, to keep confidential information. It is difficult to deem that Plaintiff 1 and Nonparty 1 had an express agreement with the explicit intention to transfer financial assets of the family name account to Plaintiff 1.

Ultimately, the parties to the fund transaction, and the subject to whom the relevant financial assets accrue, made in the name of a family account, are the remaining plaintiffs who are the nominal holders of the relevant account (in the case of Plaintiff 2, there was insufficient points in the real name verification procedure in the case of Plaintiff 2, but it is not a reason to regard it differently from

Meanwhile, the Defendant asserts that Plaintiff 1’s act of opening a family name account in his name without the remaining Defendants’ consent and purchasing the instant fund constitutes an act of unauthorized representation and thus null and void. However, insofar as the rest of the Plaintiffs filed the instant lawsuit on the premise that they are parties to a transaction with respect to a family name account and the subject to the attribution of financial assets, such assertion appears to include the Plaintiff 1’s declaration of ratification of the act of unauthorized Representation. Therefore, the Defendant’s assertion is without merit.

3. Occurrence of liability for damages;

A. Facts of recognition

피고 은행에서 이 사건 펀드 판매 업무를 담당하고 있던 소외 1은 원고 1이 48억 원가량의 재개발보상금을 받는다는 사실을 알고 지점장과 함께 그를 찾아가 위 보상금을 이 사건 펀드 등에 투자하라고 적극 권유하였다. 원고 1은 초등학교를 졸업하고 쥐덫 등을 생산하는 가내수공업 공장을 운영해 왔는데, 이 사건 펀드를 매입하기 전까지는 위험성 있는 간접투자상품을 매입한 경험이 없었기 때문에 투자를 망설이면서 소외 1에게 원금이 보장되는 안정성을 최우선으로 요구하였다.

Although the fund of this case is a product seeking high profits by taking a considerable risk as it invests in over-the-counter derivatives under the Indirect Investment Asset Act, Nonparty 1 explained Plaintiff 1 the profit structure of the fund of this case and explained Plaintiff 1 to the effect that if the share price falls above 45%, it may incur losses, but the fund of this case is investing in five superior domestic and foreign items, such as Samsung Electronic, and thus it is very safe, and it stated that “the principal shall be guaranteed unless it is trie electronic.” In this process, Nonparty 1 explained Plaintiff 1 only by emphasizing only the size, safety, etc. of the company that serves as the underlying asset of the fund of this case, and explain the risk that the share price falls according to the economic situation even if it is superior. Accordingly, Plaintiff 1 understood the fund of this case and consented to the investment of this case as the guarantee of principal.

Nonparty 1, while entering into a fund purchase contract with Plaintiff 1 on 6 cases of this case, arbitrarily prepared “personal investment impact analysis table” with respect to the Plaintiffs. The phrase “I wish to actively manage and operate the investment product purchased from a specific market point at the particular market point.” In addition, Nonparty 1 stated that the contractor is fully aware of “investment risk in the stock market, investment risk in bonds and interest rate market, investment risk in the foreign exchange market, and investment risk in the alternative investment market” and written “the risk preference of the product” on “15% or above,” and written differently from the actual investment inclination or investment purpose of Plaintiff 1.

In addition, although Nonparty 1 did not fully explain the profit structure and risk of the Fund of this case to Plaintiff 1, it had Plaintiff 1 formally sign on the “indirect product customer investment certificate” and the “written confirmation of the issuance and major contents of the investment prospectus” with the Plaintiff 1’s consent. The “written confirmation of investment from indirect investment product customer” includes the following documents: “I have finished an analysis of personal investment inclination and confirmed that the products proposed are appropriate for the principal and are in conformity with the investment goal of the principal. I have determined that the products proposed in Ear are appropriate for the principal.” The “written confirmation of the issuance and major contents of the investment prospectus” contains the following: “In the event that the investment prospectus was not voluntarily repaid by the issuing company during the investment period and only one of the underlying assets fell by up to 0% of the base price, the maximum loss amount can be 100% of the investment principal, and thus, it is reasonable to note that the major amount can be 100% of the investment principal of the investment amount.”

Nonparty 1, around January 2008, did not explain that the stock price would have been recovered when there was a possibility of loss of principal due to the decline of the first stock price by less than 5% of the initial stock price, and that there was no room for other options, such as repurchase, even in order to reduce loss.

[Ground of recognition] A without dispute, Gap evidence 9, Gap evidence 13-2, 3, Gap evidence 15, Eul evidence 1-6, Eul evidence 3-5, Eul evidence 21 (part), non-party 2's testimony, non-party 1's witness's witness's witness's partial testimony, and the whole purport of the argument

B. Determination

1) Liability for damages caused by breach of customer protection obligations

When any executive or employee of a bank that engages in the business of selling beneficiary certificates in accordance with Article 26 of the Indirect Investment Asset Management Act solicits a customer to purchase beneficiary certificates, he/she has the duty of care to protect the customer so that the customer may make reasonable investment decisions based on the relevant information by clearly explaining the characteristics and major contents of the relevant beneficiary certificates, including the risks associated with the investment. When the customer incurs any loss to the customer as a result of the violation of such duty of care, liability for tort damages is established. In such cases, the degree of explanation to the customer should be determined by comprehensively taking into account the characteristics of the relevant beneficiary certificates, the level of risk, experience and ability of the customer (see, e.g., Supreme Court Decision 2008Da52369, Nov

In this case, Nonparty 1 solicited Plaintiff 1, a person with no experience in purchasing indirect investment products as an elderly academic career, who is highly funded investment inclination, to purchase the Fund by investing a large amount of money, and did not properly explain the safety and profitability of the Fund and the risk of loss of principal due to its management method or maturity. Accordingly, Plaintiff 1 purchased the Fund in his name or on behalf of the rest of the Plaintiffs under the belief that the Fund is a product substantially guaranteed principal. The aforementioned act by Nonparty 1 constitutes an act that interfered with the Plaintiffs’ proper awareness of the risk accompanied by the investment act or actively recommended transactions involving excessive risk in light of the investment situation, and an unfair solicitation that did not protect the Plaintiffs. Accordingly, Defendant bank, the employer, is liable to compensate the Plaintiffs for damages incurred by the Plaintiffs due to the occupational tort.

2) Liability for damages caused by deception

The Plaintiffs, while soliciting Nonparty 1 to purchase the Fund of this case with the risk of principal loss to Plaintiff 1, the Plaintiffs asserted that Nonparty 1 purchased the Fund of this case as if the Fund of this case was a product guaranteed principal by the Fund, such as explaining, “Unless the principal is ensured,” and “I do not know about whether the principal is guaranteed,” and that Nonparty 1 had the Fund purchase it as if it was a product guaranteed by the Fund of this case. Even after the occurrence of principal loss due to the decline in the stock price, the Plaintiffs presented to Plaintiff 1 the remaining number of units, which is not appraised in the transaction statement, and presented the balance as if the principal remains as it remains, by falsely explaining the balance as if the principal remains. However, it is insufficient to recognize such active deception only with the statement of evidence No. 9, No. 13-3, and No. 15, and the testimony of Nonparty 2, this is not acceptable.

4. Scope of liability for damages

(a) Damages;

Damage suffered by the Plaintiffs by Nonparty 1’s tort is an investment loss amount that would have not occurred if they had not committed a tort. In other words, the amount calculated by deducting the redemption price received by the Plaintiffs at the maturity of the principal and the dividends paid once a year, from the principal amount that the Plaintiffs subscribed to the instant fund, which is the amount indicated in the column for the principal loss amount in the Schedule ‘

B. Limitation on liability

Meanwhile, the Plaintiffs, as investors, did not endeavor to make an investment after carefully ascertaining the contents of the trust product, profit and loss structure, and investment risk, etc. of the investment trust product, and making it possible to make an investment. Although Nonparty 1 stated the risk of principal loss in general in the “indirect product customer investment confirmation document” and the “investment prospectus issuance and major explanation document,” the investment prospectus issued by Nonparty 1, who made the investment prospectus and major explanation, it did not properly confirm the risk of principal loss of the instant fund, and made an investment by making the investment at the end of Nonparty 1 in a lump sum. In addition, in January 2008, Plaintiff 1 did not make an effort to recover the principal amount of the instant fund at all without making an effort to reduce principal loss (Article 9). In addition, even though Nonparty 1 became aware that it did not make an effort to recover the principal amount of the instant fund at all times due to the financial crisis that occurred in the United States around January 2008 and was paid once every year (Article 1).

In addition, Plaintiff 1 had almost all of the money received as compensation upon Nonparty 1’s recommendation. Accordingly, Nonparty 1 purchased and operated 30 funds and financial instruments including the Fund in the name of himself or the remaining Plaintiffs before and after the purchase of the Fund, and made profits exceeding KRW 400 million in the remaining part of the Fund except for the Fund (No. 9, No. 13-2, No. 13-2, No. 7-20, No. 21, and No. 1 of witness). At the time of the purchase of the Fund, the Fund was based on five superior items, and Nonparty 1 recommended Nonparty 1 to purchase that it would be relatively stable among the indirect investment products, and that the principal loss of the Fund was incurred due to the global financial crisis that occurred prior to the failure to deposit due to the U.S. hybrid base.

In addition to these various circumstances, the damages suffered by the plaintiffs are limited to 35% of the damages suffered by the plaintiffs, taking into account the negligence on the part of the plaintiffs.

The remaining Plaintiffs except Plaintiff 1 did not explain to the rest of the Plaintiffs that the principal is not guaranteed when Nonparty 1 purchased the instant fund, and that the stock price of one company out of five underlying assets falls above 45%, and that there is no provision of investment prospectus, terms, etc. with respect to the instant fund. Therefore, there is no room for applying comparative negligence against the rest of the Plaintiffs. However, in the instant case where Plaintiff 1 purchased the instant fund on behalf of the rest of the Plaintiffs on behalf of the rest of the Plaintiffs, it is sufficient that Plaintiff 1, an agent, performed the duty of explanation, customer protection, etc. on the rest of the Plaintiffs, and it is not necessary to directly perform such duty against the rest of the Plaintiffs, who are the contracting parties. In addition, in light of the aforementioned various circumstances, there is no circumstance that the percentage of comparative negligence between Plaintiff 1 and the rest of the Plaintiffs should be different.

5. Determination on the plaintiff 1's claim

Plaintiff 1’s claim is dismissed on the ground that the transaction party to the family name account is Plaintiff 1. In the event that the remaining plaintiffs’ claim is dismissed, the Defendant Company asserts that the Plaintiff, the subject to which the said account belongs, is liable to compensate the Plaintiff for the principal loss amounting to KRW 423,790,300 incurred by purchasing the instant fund through the said account as the employer’s liability. However, as seen earlier, the transaction party to the family name account is the remaining Plaintiffs, and the Plaintiff 1 purchased the instant fund on behalf of the rest of the Plaintiffs, and therefore, this part of the assertion premisedd Plaintiff 1 as the transaction party to the family name account

6. Conclusion

The Defendant Bank has a duty to pay 170,854,803 won (=488,156,580 won x 0.35) to Plaintiff 1, and 2 to Plaintiff 19,434,734 won (=5,527,813 won x 0.35; hereinafter the same shall apply) to Plaintiff 3,4, and 5 respectively (=61,019,575 won x 0.35), and to pay 64,070,551 won to Plaintiff 6 (=183,058,719 x 0.35 x 0.35 x 0) and damages for delay from the following day of the delivery of a copy of the complaint of this case to January 21, 2011.

Judge Oral J.S. (Presiding Judge)