Open Decision Ledger · Capital markets & finance
The meaning of information that may have a material impact on investment decisions and the punishment of insider trading before the enactment of the Ministry of Finance Rule
Translated from the Korean original. Read the Korean
Supreme Court, Apr. 26, 1994, 93Do695 (judgment)
Case name: 특정경제범죄가중처벌등에관한법률위반(알선수재),증권거래법위반
Official text on the National Law Information Center
Question
If the representative director on the side of the largest shareholder, aware of the company's severe liquidity crisis, sold shares before that information was disclosed, would it constitute a violation of the insider trading prohibition even before the Ministry of Finance Rule prescribing the method of disclosure was enacted?
Holding
Information that may have a material impact on investment decisions is information that a reasonable investor, comparing and weighing materiality and probability, would regard as possessing significant value, and it need not be objectively clear and certain. The Supreme Court held that the Ministry of Finance Rule merely prescribes the method and timing of disclosure, so if the information was never disclosed at all, trading before its enactment also constitutes a violation, and dismissed the final appeal.
Summary of the holding, verbatim
투자자의 투자판단에 중대한 영향을 미칠 수 있는 정보가 어떤 방법으로든지 일반인에게 전혀 공개되지 아니하였다면, 그 정보가 공개되기 전에 그 정보를 이용하여 이루어진 내부자거래는 위 법조항의 위임에 의한 재무부령의 규정내용과는 관계없이 같은 법 제188조의2 제1항의 규정에 위반되는 것이고
Unofficial English translation
If information that may have a significant impact on an investor's investment decision has not been disclosed to the public at all by any means whatsoever, then insider trading conducted by using that information before its disclosure violates Article 188-2 (1) of the same Act, irrespective of the contents of the provisions of the Ministry of Finance Decree under the delegation of the aforesaid Article, and
Disposition
Dismissed Stated in the decision
상고를 모두 기각한다.
Unofficial English translation
All appeals are dismissed.
Form of the test
Elements stated Stated in the decision
유가증권의 거래에 관한 의사를 결정함에 있어서 중요한 가치를 지닌다고 생각하는 정보를 가리키는 것이라고 해석함이 상당하고
Unofficial English translation
it is reasonable to interpret it as referring to information that is regarded as of significant value in deciding on a transaction in securities, and
Factors
- 법인경영에 관하여 중대한 영향을 미칠 사실
- 그 정보의 중대성과 사실이 발생할 개연성을 비교 평가하여
- 일반인에게 정보를 공개하는 방법과 그 방법에 따라 그 정보가 공개된 것으로 보게 되는 시점에 관한 것일 뿐으로
- 어떤 방법으로든지 일반인에게 전혀 공개되지 아니하였다면
Unofficial English translation
• a fact that may have a significant impact on the management of a corporation
• by comparing and assessing the significance of that information and the likelihood that the fact will occur
• pertaining only to the method of disclosing information to the public and the point in time at which, under such method, the information is deemed to have been disclosed
• if it has not been disclosed to the public at all by any means whatsoever
Relation to precedent
States a new standard Read from the decision
그 정보가 반드시 객관적으로 명확하고 확실할 것까지 필요로 하지는 아니한다
Unofficial English translation
it is not necessary that the information be objectively clear and certain
Decisions referred to
None listed
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
Where information intertwined with irregularities within a corporation, such as the actual liquidity crisis of a company shown as recording a book profit, is concerned, by what method must it become known before it is deemed disclosed and the insider trading prohibition is lifted?
This reading needs to be re-examined if the definition of unpublished material information under Article 174 of the Financial Investment Services and Capital Markets Act, or the provisions on the timing of disclosure of information, are amended.
Cross-family AI independent reading & axis check
6 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-16
When compared with an independent reading by another AI model (GPT-6 Astra), which read only the original text without seeing the first reading, 6 of the 8 axes matched, and the readings diverged on Axis 6 (Relation to precedent) and Axis 8 (Open question and revisit condition).
Axis 6 (Relation to precedent): Primary “States a new standard” vs Independent “Cannot be determined”
In that the original text specifically construes the meaning of the information and the scope of the delegation, it may be read as setting a new standard, but since it does not make the relation to earlier decisions explicit, it may also be read as cannot be determined.
그 정보가 반드시 객관적으로 명확하고 확실할 것까지 필요로 하지는 아니한다Axis 8 (Open question and revisit condition): Primary “Where information intertwined with irregularities within a corporation, such as the actual liquidity crisis of a company shown as recording a book profit, is concerned, by what method must it become known before it is deemed disclosed and the insider trading prohibition is lifted?” vs Independent “Where information had been partially disclosed to the public before the enactment of the Ministry of Finance Rule, by what standard is the unlawfulness of the insider trading judged?”
The first reading asks by what method the disclosure of information intertwined with internal irregularities is recognized, while the independent reading asks the standard for judging unlawfulness where information was partially disclosed before the enactment of the Ministry of Finance Rule.
투자자의 투자판단에 중대한 영향을 미칠 수 있는 정보가 어떤 방법으로든지 일반인에게 전혀 공개되지 아니하였다면, 그 정보가 공개되기 전에 그 정보를 이용하여 이루어진 내부자거래는 위 법조항의 위임에 의한 재무부령의 규정내용과는 관계없이 같은 법 제188조의2 제1항의 규정에 위반되는 것이고Raw responses and comparison record: Protocol · Blind readings (JSONL) · Axis comparison (JSONL) · SHA-256 (JSON)
Lower-court contrast & scope of application
Lower-court reading vs. Supreme Court holding
Lower-court context: The court below, citing the evidence of the first-instance judgment, found that Defendant 1, as the representative director of Co-defendant 2 Corporation, the largest shareholder of Non-indicted Corporation, and in the capacity of executive partner of an investment association, knew of the severe liquidity crisis of Non-indicted Corporation and of the fact that the opening price immediately after listing had been manipulated to an absurdly high level, and sold all of the shares he owned, totaling 482,000 shares, from February 1, 1992 to February 17, 1992. It applied the penal provisions for violation of the insider trading prohibition to Defendant 1 and Co-defendant 2 Corporation.
Supreme Court standard: The Supreme Court held that, unlike a book profit, a liquidity crisis severe enough for notes and checks to be dishonored is material information for a reasonable investor, and that even where the information concerns facts arising before the listing, or is intertwined with irregularities within a corporation such that a reporting duty can hardly be expected, insider trading before disclosure is prohibited. What was delegated to the Ministry of Finance Rule was only the method and timing of disclosure, so that trading before the enactment of the Ministry of Finance Rule on April 28, 1992 may also be punished; it affirmed the court below and dismissed the final appeal.
Distinguishing conditions
- Where the information was disclosed to the public by any means, such as a public announcement or a press report, before the transaction
- Where the information does not constitute a fact that may have a material impact on the management of the corporation and therefore has no significant value for the decision-making of a reasonable investor
- Where the trader learned the information not in the capacity of an insider and not in connection with his or her duties
Record verification notes
Before asserting that insider trading is established, one must first confirm whether the information had been disclosed by any means at the time of the sale, and whether the trader learned the information in connection with his or her duties.
From the official text
Points at issue
가. 증권거래법 제188조의2 제2항 소정의 "투자자의 투자판단에 중대한 영향을 미칠 수 있는 정보"의 의미 나. 위 "가"항의 정보를 이용한 유가증권거래행위가 같은 법조항의 위임에 따른 재무부령이 제정되기 전에 이루어진 경우에도 같은 법 제188조의2 제1항 규정 위반인지 여부
Unofficial English translation
(a) The meaning of "information that may have a significant impact on an investor's investment decision" as used in Article 188-2 (2) of the Securities and Exchange Act; (b) Whether a transaction in securities carried out using the information under item (a) above before the enactment of the Ministry of Finance Decree under the delegation of the same Article constitutes a violation of Article 188-2 (1) of the same Act
Summary of the holding
가. 증권거래법 제188조의2 제2항 소정의 "투자자의 투자판단에 중대한 영향을 미칠 수 있는 정보"라 함은, 구 증권거래법(1994.1.5. 법률 제4701호로 개정되기 전의 것) 제186조 제1항 제1호 내지 제11호에 유형이 개별적으로 예시되고 제12호에 포괄적으로 규정되어 있는 "법인경영에 관하여 중대한 영향을 미칠 사실"들 가운데, 합리적인 투자자라면 그 정보의 중대성과 사실이 발생할 개연성을 비교 평가하여 판단할 경우 유가증권의 거래에 관한 의사를 결정함에 있어서 중요한 가치를 지닌다고 생각하는 정보를 가리키는 것이라고 해석함이 상당하고, 그 정보가 반드시 객관적으로 명확하고 확실할 것까지 필요로 하지는 아니한다. 나. 증권거래법 제188조의2 제2항이 재무부령에 위임하고 있는 사항은 당해 법인이 다수인으로 하여금 알 수 있도록 일반인에게 정보를 공개하는 방법과 그 방법에 따라 그 정보가 공개된 것으로 보게 되는 시점에 관한 것일 뿐으로 해석되므로, 투자자의 투자판단에 중대한 영향을 미칠 수 있는 정보가 어떤 방법으로든지 일반인에게 전혀 공개되지 아니하였다면, 그 정보가 공개되기 전에 그 정보를 이용하여 이루어진 내부자거래는 위 법조항의 위임에 의한 재무부령의 규정내용과는 관계없이 같은 법 제188조의2 제1항의 규정에 위반되는 것이고, 따라서 그 거래행위가 같은 법 제188조의2 제2항의 위임에 따라 재무부령이 제정된 1992.4.28. 이전에 이루어진 것이라고 하더라도 같은 법 제188조의2 제1항의 규정에 위반한 행위로 보아야 한다.
Order
상고를 모두 기각한다.
Unofficial English translation
All appeals are dismissed.
Provisions referred to
증권거래법 제188조의2 제1항, 제2항, 구 증권거래법(1994.1.5. 법률 제4701호로 개정되기 전의 것) 제186조 제1항
Read 2026-10-16 · Cross-read 2026-10-16. All quotes matched against the official text. The Chinese-character placeholders the court used for anonymised parties are given in their Korean readings, and parenthetical Chinese-character glosses are omitted.
Every entry is published only after all quotes have been matched character by character against the official text, and audited by an independent second reading from a different model family across all eight axes. Both agreed axes and text-grounded interpretive divergences are recorded openly. The ledger is a research record, not an assessment of the court or advice on any matter.
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