Open Decision Ledger · Capital markets & finance
Meaning of the Intent to Induce Buy or Sell Transactions under the Securities and Exchange Act and the Test for Determining Whether Trading Constitutes Trading That Moves Market Prices
Translated from the Korean original. Read the Korean
Supreme Court, June 26, 2001, 99Do2282 (judgment)
Case name: 증권거래법위반
Official text on the National Law Information Center
Question
Does stock accumulation that repeatedly places high-priced buy orders to raise the stock price in order to recover losses from a decline in the stock price constitute market manipulation with the intent to induce buy or sell transactions?
Holding
An intent to induce buy or sell transactions is an intent to cause investors to mistake market prices altered by artificial manipulation for prices formed by natural supply and demand, thereby drawing them into trading; and whether a given trading transaction is one that moves market prices is determined by comprehensively considering the character of the securities, the total number of issued shares, the motive and type of the transaction, price trends, the circumstances of the transaction, and the like. The accumulation in this case is the so-called manipulative operation and falls within this category.
Summary of the holding, verbatim
인위적인 조작을 가하여 시세를 변동시킴에도 불구하고 투자자에게는 그 시세가 유가증권시장에서의 자연적인 수요·공급의 원칙에 의하여 형성된 것으로 오인시켜 유가증권의 매매거래에 끌어들이려는 목적을 말하고
Unofficial English translation
it means the purpose of inducing investors into trading in securities by causing them to mistakenly believe that the market price, which has been changed by artificial manipulation, is formed by the natural principle of supply and demand in the securities market, and
Disposition
Dismissed Stated in the decision
상고를 기각한다.
Unofficial English translation
The appeal is dismissed.
Form of the test
Circumstances weighed Stated in the decision
종전 및 당시의 거래상황 등을 종합적으로 고려하여 판단하여야 한다.
Unofficial English translation
must be determined by comprehensively considering the previous and then-current trading conditions, etc.
Factors
- 그 유가증권의 성격과 발행된 유가증권의 총수
- 매매거래의 동기와 유형
- 그 유가증권 가격의 동향
- 종전 및 당시의 거래상황
Unofficial English translation
• the nature of the securities and the total number of securities issued
• the motive and type of the trading transactions
• the trend of the price of the securities
• the previous and then-current trading conditions
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
Even where covering losses or resolving a shortfall in collateral was the principal motive, what circumstances must exist for an intent to induce general investors to be recognized?
If the Supreme Court's holding changes regarding the interpretation of the current prohibition on market manipulation, which succeeded Article 188-4 paragraph (2) of the Securities and Exchange Act, this reading will be re-examined.
Cross-family AI independent reading & axis check
8 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-16
In comparison with an independent reading of the original text alone, conducted without seeing the primary reading by an AI from a different lineage (GPT-6 Astra), all 8 axes matched.
Raw 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 reasoning does not separately set out the reasoning process of the court below; it can only be confirmed that the court below, in the same sense as the facts recognized by the Supreme Court, viewed the buy and sell transactions in this case as market manipulation with the intent to induce buy or sell transactions and found the defendant guilty.
Supreme Court standard: The Supreme Court comprehensively considered the small capital and total number of issued shares of the company in question, the circumstances in which the defendant purchased shares on margin and was then exposed to losses and the risk of a shortfall in collateral due to the decline in the stock price, the manner of trading that repeatedly placed high-priced buy orders, and the trend whereby the stock price soared and then fell sharply from 43,000 won to 115,000 won, and, viewing the judgment of the court below as just, dismissed the final appeal.
Distinguishing conditions
- Where the total number of issued shares is large and trading volume is abundant, so that individual buy orders have only a negligible effect on price formation
- Where buy orders were placed at ordinary prices in light of the immediately preceding price or the price of the opposing offer
- Where the change in the stock price is explained by natural supply and demand rather than by artificial manipulation
Record verification notes
Before asserting the same conclusion, confirm from the trading records the level and frequency of the price quotes of the buy orders, whether there is any connection among the relevant accounts, and the trend of the stock price.
From the official text
Points at issue
[1] 시세조종 등의 금지에 관한 증권거래법 제188조의4 제2항 소정의 '매매거래를 유인할 목적'의 의미 및 같은 항 제1호 소정의 '유가증권의 매매거래가 성황을 이루고 있는 듯이 잘못 알게 하거나 그 시세를 변동시키는 매매거래'에 해당하는지 여부의 판단 기준 [2] 주식 매집 행위가 속칭 작전행위로서 주식 매매거래의 유인 목적의 시세조종행위에 해당한다고 본 사례
Unofficial English translation
[1] The criteria for determining the meaning of 'purpose of inducing trading transactions' as provided in Article 188-4 (2) of the Securities and Exchange Act concerning the prohibition of market manipulation, etc., and whether a case falls under 'a trading transaction which causes investors to falsely believe that trading in securities is being briskly conducted or which changes the market price thereof' as provided in subparagraph 1 of the same paragraph [2] A case where an act of accumulating shares was regarded as market manipulation with the purpose of inducing trading in shares, in the form of a so-called manipulative operation
Summary of the holding
[1] 증권거래법 제188조의4 제2항은 "누구든지 유가증권시장 또는 협회중개시장에서의 매매거래를 유인할 목적으로 다음 각 호의 1에 해당하는 행위를 하지 못한다."고 규정하면서, 제1호에서 "단독으로 또는 타인과 공모하여 유가증권의 매매거래가 성황을 이루고 있는 듯이 잘못 알게 하거나 그 시세를 변동시키는 매매거래 또는 그 위탁이나 수탁을 하는 행위"를 들고 있는바, 여기서 '매매거래를 유인할 목적'이라 함은 인위적인 조작을 가하여 시세를 변동시킴에도 불구하고 투자자에게는 그 시세가 유가증권시장에서의 자연적인 수요·공급의 원칙에 의하여 형성된 것으로 오인시켜 유가증권의 매매거래에 끌어들이려는 목적을 말하고, '유가증권의 매매거래가 성황을 이루고 있는 듯이 잘못 알게 하거나 그 시세를 변동시키는 매매거래'에 해당하는지의 여부는 그 유가증권의 성격과 발행된 유가증권의 총수, 매매거래의 동기와 유형, 그 유가증권 가격의 동향, 종전 및 당시의 거래상황 등을 종합적으로 고려하여 판단하여야 한다. [2] 주식 매집 행위가 속칭 작전행위로서 주식 매매거래의 유인 목적의 시세조종행위에 해당한다고 본 사례.
Order
상고를 기각한다.
Unofficial English translation
The appeal is dismissed.
Provisions referred to
[1] 증권거래법 제188조의4 제2항 제1호 [2] 증권거래법 제188조의4 제2항 제1호
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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