Open Decision Ledger · Capital markets & finance
Method of Calculating Investor Losses from Market Manipulation under the Securities and Exchange Act and the Method of Estimating the Normal Stock Price
Translated from the Korean original. Read the Korean
Supreme Court, May 28, 2004, 2003Da69607 (judgment)
Case name: 손해배상(기)
Official text on the National Law Information Center
Question
How is the loss of an investor who traded at a price formed by market manipulation under Article 188-4 (2) 1 of the Securities and Exchange Act calculated?
Holding
The amount corresponding to the difference between the normal stock price that would have been formed but for the market manipulation and the manipulated price at which the investor actually purchased may be regarded as the loss. The Supreme Court held that the normal stock price may be estimated by reasonable methods, such as a regression equation based on expert appraisal or other financial and economic methods.
Summary of the holding, verbatim
그와 같은 시세조종행위가 없었더라면 매수 당시 형성되었으리라고 인정되는 주가(정상주가)와 시세조종행위로 인하여 형성된 주가로서 그 투자자가 실제로 매수한 주가(조작주가)와의 차액 상당(만약, 정상주가 이상의 가격으로 실제 매도한 경우에는 조작주가와 그 매도주가와의 차액 상당)을 손해로 볼 수 있고
Unofficial English translation
the amount of the difference between the share price that would have been formed at the time of purchase had there been no such market manipulation (the normal share price) and the share price formed as a result of market manipulation, being the share price at which the investor actually purchased (the manipulated share price) (if the investor actually sold at a price equal to or above the normal share price, the amount of the difference between the manipulated share price and the selling price), may be regarded as damages, and
Disposition
Reversed and remanded Stated in the decision
원심판결을 파기하고, 사건을 서울고등법원에 환송한다.
Unofficial English translation
The judgment of the court below is reversed, and the case is remanded to the Seoul High Court.
Form of the test
Elements stated Stated in the decision
사건기간 중의 정상주가를 추정하는 금융경제학적 방식 등의 합리적인 방법에 의할 수 있다.
Unofficial English translation
a reasonable method, such as a financial economics method, may be used to estimate the normal share price during the period of the case.
Factors
- 시세조종행위가 없었더라면 매수 당시 형성되었으리라고 인정되는 주가(정상주가)
- 그 투자자가 실제로 매수한 주가(조작주가)
- 그 차이가 통계적으로 의미가 있는 경우
- 종합주가지수, 업종지수 및 동종업체의 주가 등 공개된 지표 중 가장 적절한 것
- 회귀방정식을 이용하여 사건기간 동안의 정상수익률을 산출
Unofficial English translation
• the share price that would have been formed at the time of purchase had there been no market manipulation (the normal share price)
• the share price at which the investor actually purchased (the manipulated share price)
• where the difference is statistically significant
• the most appropriate one among publicly available indicators such as the composite stock price index, the industry index, and the share prices of companies in the same industry
• calculating the normal rate of return during the period of the case by using a regression equation
Relation to precedent
States a new standard Read from the decision
금융경제학적 방식 등의 합리적인 방법에 의할 수 있다
Unofficial English translation
a reasonable method, such as a financial economics method, may be used
Decisions referred to
None listed
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
How should the estimation period and the underlying indicators of the regression equation be selected in order to be recognized as a reasonable method, and where do its limits lie?
If, after the provisions on damages for market manipulation were moved to Article 177 of the Financial Investment Services and Capital Markets Act, the Supreme Court determines the method of calculating losses differently, this reading will be re-examined.
Cross-family AI independent reading & axis check
5 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-16
When compared with an independent reading by another AI series (GPT-6 Astra), which read only the original text without seeing the first reading, 5 of the 8 axes matched, and the readings diverged on axis 2 (Holding), axis 6 (Relation to precedent), and axis 8 (Open question and revisit condition).
Axis 2 (Holding): Primary “The amount corresponding to the difference between the normal stock price that would have been formed but for the market manipulation and the manipulated price at which the investor actually purchased may be regarded as the loss. The Supreme Court held that the normal stock price may be estimated by reasonable methods, such as a regression equation based on expert appraisal or other financial and economic methods.” vs Independent “The loss is the difference between the manipulated price and the normal stock price at the time of purchase, and where the investor actually sold at a price higher than the normal stock price, it is the difference between the manipulated price and the selling price. The normal stock price may be estimated by reasonable methods, such as regression analysis using expert appraisal and public indicators.”
The basic calculation of the difference and the method of estimating the normal stock price are the same, but the independent reading contains an exception to the effect that, where the investor sold at a price higher than the normal stock price, the selling price serves as the basis, while the first reading omitted this.
그와 같은 시세조종행위가 없었더라면 매수 당시 형성되었으리라고 인정되는 주가(정상주가)와 시세조종행위로 인하여 형성된 주가로서 그 투자자가 실제로 매수한 주가(조작주가)와의 차액 상당(만약, 정상주가 이상의 가격으로 실제 매도한 경우에는 조작주가와 그 매도주가와의 차액 상당)을 손해로 볼 수 있고Axis 6 (Relation to precedent): Primary “States a new standard” vs Independent “Cannot be determined”
In that the original text set out a specific method of calculating losses, it may be read as a new standard, but in that it did not specify the relationship with earlier precedent, it may be read as cannot be determined.
금융경제학적 방식 등의 합리적인 방법에 의할 수 있다Axis 8 (Open question and revisit condition): Primary “How should the estimation period and the underlying indicators of the regression equation be selected in order to be recognized as a reasonable method, and where do its limits lie?” vs Independent “Where multiple reasonable methods of estimating the normal stock price yield different results, which method should take precedence?”
The first reading asks about the reasonableness of the selection of the estimation period and underlying indicators of the regression analysis, while the independent reading asks about the priority among multiple reasonable methods that yield different results.
그와 같은 시세조종행위가 없었더라면 매수 당시 형성되었으리라고 인정되는 주가(정상주가)와 시세조종행위로 인하여 형성된 주가로서 그 투자자가 실제로 매수한 주가(조작주가)와의 차액 상당(만약, 정상주가 이상의 가격으로 실제 매도한 경우에는 조작주가와 그 매도주가와의 차액 상당)을 손해로 볼 수 있고Raw 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 regarded the difference between the normal stock price and the manipulated price as the loss and adopted the appraiser's financial and economic analysis; however, in one part of its reasoning it took the date of the initial market manipulation to be April 4, 1998, while in another part it adopted, without change, the appraisal results based on the 9th of the same month.
Supreme Court standard: The Supreme Court held that the court below's method of calculating the amount of loss was itself proper. However, it remanded the case, holding that the court below's findings of fact on this point contained a contradiction in reasoning or violated the rules of evidence, because if the date of the initial market manipulation changes, the end date of the estimation period, the regression equation, and the stock price on the day immediately preceding the period of the case change, leaving room for the amount of loss to vary.
Distinguishing conditions
- Cases in which the loss at issue arises from other unfair trading practices that are not market manipulation under Article 188-4 (2) 1 of the Securities and Exchange Act (use of undisclosed information, false or incomplete disclosure, etc.)
- Cases in which the expert appraisal does not confirm that the difference between the stock price trend during the period of the case and the normal stock price trend is statistically significant
- Cases in which the underlying facts on which the appraisal was based, such as the date of the initial market manipulation, were not established on the record or conflict with the court's findings of fact
Record verification notes
Before asserting the same method of calculation, one first needs to check whether the underlying facts of the appraisal, in particular the time when the market manipulation commenced, the estimation period, and the selected public indicators, match the facts found by the court.
From the official text
Points at issue
증권거래법 제188조의4 제2항 제1호의 시세조종행위에 의하여 당해 유가증권의 매매거래 또는 위탁을 한 투자자가 입은 손해의 산정방법
Unofficial English translation
The method for calculating the damages suffered by an investor who traded in, or placed an entrustment with respect to, the relevant securities due to market manipulation under Article 188-4 (2) subparagraph 1 of the Securities and Exchange Act
Summary of the holding
증권거래법 제188조의4 제2항 제1호의 시세조종행위로 인하여 형성된 가격에 의하여 유가증권시장 또는 코스닥시장에서 당해 유가증권의 매매거래 또는 위탁을 한 투자자가 그 매매거래 또는 위탁에 관하여 입은 손해를 산정함에 있어서는, 그와 같은 시세조종행위가 없었더라면 매수 당시 형성되었으리라고 인정되는 주가(정상주가)와 시세조종행위로 인하여 형성된 주가로서 그 투자자가 실제로 매수한 주가(조작주가)와의 차액 상당(만약, 정상주가 이상의 가격으로 실제 매도한 경우에는 조작주가와 그 매도주가와의 차액 상당)을 손해로 볼 수 있고, 여기서 정상주가의 산정방법으로는, 전문가의 감정을 통하여 그와 같은 시세조종행위가 발생하여 그 영향을 받은 기간(사건기간) 중의 주가동향과 그 사건이 없었더라면 진행되었을 주가동향을 비교한 다음 그 차이가 통계적으로 의미가 있는 경우 시세조종행위의 영향으로 주가가 변동되었다고 보고, 사건기간 이전이나 이후의 일정 기간의 종합주가지수, 업종지수 및 동종업체의 주가 등 공개된 지표 중 가장 적절한 것을 바탕으로 도출한 회귀방정식을 이용하여 사건기간 동안의 정상수익률을 산출한 다음 이를 기초로 사건기간 중의 정상주가를 추정하는 금융경제학적 방식 등의 합리적인 방법에 의할 수 있다.
Order
원심판결을 파기하고, 사건을 서울고등법원에 환송한다.
Unofficial English translation
The judgment of the court below is reversed, and the case is remanded to the Seoul High Court.
Provisions referred to
증권거래법 제188조의4 제2항 제1호, 제188조의5 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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