Open Decision Ledger · Capital markets & finance
Amendment of the Securities and Exchange Act Excluding Mere Registered Companies from the Scope of Punishment for Insider Trading, and the Judgment Terminating Prosecution on Statutory Grounds (Myeonso) Following Abolition of the Penalty
Translated from the Korean original. Read the Korean
Supreme Court, June 11, 1999, 98Do3097 (judgment)
Case name: 증권거래법위반
Official text on the National Law Information Center
Question
Where, by an amendment of the former Securities and Exchange Act, the use of undisclosed material information by a mere registered company other than an association-registered company fell outside the scope of punishment, does this constitute a case in which the penalty was abolished by the amendment of statutes after the crime?
Holding
Because that amendment is a reflective measure taken on the view that the previous measure, which regulated even mere registered companies whose shares were not publicly traded, was unjust, it constitutes a case in which the penalty was abolished by the amendment of statutes after the crime. The Supreme Court upheld the judgment of the court below, which rendered a judgment terminating prosecution on statutory grounds (myeonso) with respect to conduct preceding the amendment.
Summary of the holding, verbatim
종전의 조치가 부당하다는 데에서 나온 반성적 조치라고 보아야 할 것이므로 이는 범죄 후의 법령개폐로 형이 폐지되었을 때에 해당한다.
Unofficial English translation
Since it must be regarded as a remedial measure taken on the ground that the prior measure was unjust, this falls under the case where the penalty has been abolished by the amendment or repeal of statutes after the commission of the crime.
Disposition
Dismissed Stated in the decision
상고를 기각한다.
Unofficial English translation
The appeal is dismissed.
Form of the test
Existing test applied Stated in the decision
범죄 후의 법령개폐로 형이 폐지된 경우에 해당하는지 여부(적극)
Unofficial English translation
Whether it falls under the case where the penalty has been abolished by the amendment or repeal of statutes after the commission of the crime (affirmative)
Factors
- 등록법인이지만 아직 한국증권업협회에의 등록을 마치지 아니하여 장외등록법인 내지 협회등록법인에까지는 이르지 못한 회사
- 유가증권시장이나 협회중개시장을 통하여 주식 등의 유가증권이 공개적으로 거래되는 상장법인이나 협회등록법인(장외등록법인)
- 투자자의 보호 차원에서 별다른 문제가 발생할 여지가 많지 않음에도 불구하고
Unofficial English translation
• a company that is registered but has not yet completed its registration with the Korea Securities Dealers Association and thus has not reached the status of an OTC-registered company, that is, a company registered with the Association
• a listed company or a company registered with the Association (an OTC-registered company) whose securities such as shares are publicly traded through the securities market or the Association's brokerage market
• despite the fact that there is little room for any particular problem to arise, from the perspective of investor protection
Relation to precedent
Cannot be determined Not in the decision
Decisions referred to
None listed
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
In an amendment that narrows the scope of punishment while simultaneously raising the statutory penalty, what determines whether the narrowed scope is a reflective measure or a mere policy change?
If Supreme Court precedent on the reflective measure criterion, which inquires into the motive for the statutory amendment in applying Article 1 (2) of the Criminal Act, has been changed, this reading is checked again.
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Lower-court contrast & scope of application
Lower-court reading vs. Supreme Court holding
Lower-court context: The court below (Seoul District Court, 98No3312) held that the defendants' act of subscribing for and being allotted convertible bonds by using undisclosed material information of Non-indicted 2 Company, a registered company, on November 9, 1996, was subject to punishment at the time of the act, but that the amended Securities and Exchange Act, which entered into force on April 1, 1997, narrowed the prohibited scope to association-registered companies so that the act no longer constituted a crime, and rendered a judgment terminating prosecution on statutory grounds (myeonso).
Supreme Court standard: After confirming the facts that Non-indicted 2 Company became a registered company on October 23, 1996 and only became an over-the-counter registered company on March 15, 1997, the Supreme Court held that the amendment was a reflective measure taken on the view that the previous measure, which regulated even mere registered companies, was unjust, and therefore constituted an abolition of the penalty; accordingly, the Supreme Court approved the judgment terminating prosecution on statutory grounds (myeonso) of the court below and dismissed the final appeal.
Distinguishing conditions
- Where undisclosed material information of a company that was already a listed company or an association-registered company (over-the-counter registered company) at the time of the act was used
- Where the statutory amendment is assessed not as a reflective measure but as a policy measure taken in response to changed circumstances
- Where the supplementary provisions of the amended Act contain a transitional provision maintaining punishment for prior conduct
Record verification notes
Before asserting the same conclusion, it is necessary to check what registration status the company in question held at the time of the act and at the time the amended Act entered into force, respectively, and whether the supplementary provisions of the amended Act contain a transitional provision.
From the official text
Points at issue
구 증권거래법 제188조의2의 개정으로 협회등록법인(장외등록법인)이 아닌 단순한 등록법인의 미공개 중요정보를 이용한 내부자거래가 처벌대상에서 제외된 것이 범죄 후의 법령개폐로 형이 폐지된 경우에 해당하는지 여부(적극)
Unofficial English translation
Whether the exclusion, under the amendment of former Article 188-2 of the Securities and Exchange Act, from the scope of punishment of insider trading using undisclosed material information of a company merely registered, other than a company registered with the Association (an OTC-registered company), falls under the case where the penalty has been abolished by the amendment or repeal of statutes after the commission of the crime (affirmative)
Summary of the holding
구 증권거래법 제188조의2가 1997. 1. 13. 법률 제5254호로 개정되면서 등록법인이지만 아직 한국증권업협회에의 등록을 마치지 아니하여 장외등록법인 내지 협회등록법인에까지는 이르지 못한 회사의 미공개 중요정보를 이용한 내부자거래를 처벌의 대상에서 제외한 취지는 유가증권시장이나 협회중개시장을 통하여 주식 등의 유가증권이 공개적으로 거래되는 상장법인이나 협회등록법인(장외등록법인)의 경우와는 달리 단순한 등록법인의 경우에는 유가증권의 발행이나 매매거래의 공정성 및 원활한 유통성의 확보나 투자자의 보호 차원에서 별다른 문제가 발생할 여지가 많지 않음에도 불구하고 이러한 경우까지 내부자거래의 규제 대상으로 삼은 종전의 조치가 부당하다는 데에서 나온 반성적 조치라고 보아야 할 것이므로 이는 범죄 후의 법령개폐로 형이 폐지되었을 때에 해당한다.
Order
상고를 기각한다.
Unofficial English translation
The appeal is dismissed.
Provisions referred to
형법 제1조 제2항, 구 증권거래법(1997. 1. 13. 법률 제5254호로 개정되기 전의 것) 제188조의2 제1항, 제208조 제6호, 증권거래법 제188조의2 제1항, 제207조의2
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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