Open Decision Ledger · Capital markets & finance
Meaning of unpublished material information under the Securities and Exchange Act and the test for determining when inside information comes into existence
Translated from the Korean original. Read the Korean
Supreme Court, Nov. 27, 2008, 2008Do6219 (judgment)
Case name: 증권거래법위반
Official text on the National Law Information Center
Question
What does information that may have a significant effect on investment judgment under Article 188-2, paragraph (2) of the Securities and Exchange Act mean, and when is that information deemed to have come into existence?
Holding
Material information is information that a reasonable investor, comparing and assessing the significance of the information with the probability of the fact's occurrence, regards as having important value in making a decision on transactions in securities. Even if that information has not yet been completed in an objectively clear and certain form, once it has been concretized to that degree, it is deemed to have come into existence.
Summary of the holding, verbatim
중요정보의 생성시기는 반드시 그러한 정보가 객관적으로 명확하고 확실하게 완성된 경우를 말하는 것이 아니라, 합리적인 투자자의 입장에서 그 정보의 중대성과 사실이 발생할 개연성을 비교 평가하여 유가증권의 거래에 관한 의사결정에서 중요한 가치를 지닌다고 생각할 정도로 구체화되면 그 정보가 생성된 것이다.
Unofficial English translation
The time at which material information comes into existence does not necessarily refer to a case where such information has been objectively and clearly completed with certainty; rather, the information comes into existence when, from the standpoint of a reasonable investor, the significance of that information and the probability of the fact occurring are compared and evaluated and the information becomes sufficiently concrete to be regarded as having significant value in making a decision concerning transactions in securities.
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
합리적인 투자자라면 그 정보의 중대성과 사실이 발생할 개연성을 비교 평가하여 판단할 경우
Unofficial English translation
where a reasonable investor makes a judgment by comparing and evaluating the significance of that information and the probability of the fact occurring
Factors
- 그 정보의 중대성과 사실이 발생할 개연성을 비교 평가하여
- 유가증권의 거래에 관한 의사 결정에서 중요한 가치를 지닌다고 생각하는 정보
- 법인 내부에서 생성되는 중요정보란 갑자기 완성되는 것이 아니라 여러 단계를 거치는 과정에서 구체화되는 것으로서
- 객관적으로 명확하고 확실하게 완성된 경우를 말하는 것이 아니라
Unofficial English translation
• comparing and evaluating the significance of that information and the probability of the fact occurring, and
• information that is regarded as having significant value in making a decision concerning transactions in securities
• material information generated within a corporation is not completed all at once but becomes concrete through a process involving several stages, and
• rather than referring to a case where it has been objectively and clearly completed with certainty
Relation to precedent
Follows earlier decisions Stated in the decision
대법원 1994. 4. 26. 선고 93도695 판결
Unofficial English translation
Supreme Court Decision 93Do695 decided April 26, 1994
Decisions referred to
대법원 1994. 4. 26. 선고 93도695 판결(공1994상, 1564), 대법원 1995. 6. 30. 선고 94도2792 판결(공1995하, 2689), 대법원 2006. 5. 11. 선고 2003도4320 판결(공2006상, 1079)
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
Even after material information has come into existence, what degree of circumstantial facts is required to find that the defendant actually obtained and used that information?
This reading will be re-examined if the interpretation of the provisions of the Financial Investment Services and Capital Markets Act, which succeeded the prohibition on the use of unpublished information under the Securities and Exchange Act, changes, or if subsequent decisions emerge concerning the time when material information comes into existence.
Cross-family AI independent reading & axis check
7 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-16
When compared with an independent reading, in which another AI model (GPT-6 Astra) read only the original text without seeing the first reading, 7 of the 8 axes agreed, and the readings diverged on the 8th axis (Open question and revisit condition).
Axis 8 (Open question and revisit condition): Primary “Even after material information has come into existence, what degree of circumstantial facts is required to find that the defendant actually obtained and used that information?” vs Independent “Where the significance of the information is high but the probability of the fact's occurrence is low, what degree of concretization is required for the material information to be deemed to have come into existence?”
The first reading asks about the degree of circumstantial facts required to acknowledge the actual obtaining and use of the information, while the independent reading asks about the standard for the coming into existence of information where significance is high and the probability of occurrence is low.
중요정보의 생성시기는 반드시 그러한 정보가 객관적으로 명확하고 확실하게 완성된 경우를 말하는 것이 아니라, 합리적인 투자자의 입장에서 그 정보의 중대성과 사실이 발생할 개연성을 비교 평가하여 유가증권의 거래에 관한 의사결정에서 중요한 가치를 지닌다고 생각할 정도로 구체화되면 그 정보가 생성된 것이다.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 court below found that the card company's business conditions deteriorated rapidly from September 2003, and that the need for a paid-in capital increase was definitively mentioned in the document titled Review Plan for Additional Capital Expansion dated September 22, 2003, and accordingly held that the material information came into existence only on September 22, 2003. Finding it difficult to acknowledge that the defendants obtained and used the material information, the court below reversed the first-instance judgment and declared the defendants not guilty.
Supreme Court standard: The Supreme Court found that the information had already been concretized by a confidential document dated July 21, 2003, containing a projected annual deficit and a review of capital expansion in the amount of approximately KRW 400 billion, and that the time when it came into existence was around that time, so that the court below had misunderstood the legal principle. However, holding that the court below's determination—that there was no direct evidence that the defendants obtained and used the information and that reasonable doubt remained—was proper, the Supreme Court concluded that the above illegality did not affect the judgment and dismissed all of the final appeals.
Distinguishing conditions
- Cases in which the circumstances are not revealed to have been concretized to a degree sufficient to compare and assess the significance of the information and the probability of the fact's occurrence on the basis of internal documents and the like
- Cases in which, even if the information has come into existence, the defendant was not in a position to access that information and there is no evidence that it was conveyed
- Cases in which the transactions were already being conducted before the information was obtained, under a prior sale agreement or an independent investment policy
Record verification notes
Before asserting that the time when material information came into existence should be moved earlier, one must first confirm whether the defendant actually obtained the information at that point in time and whether the transaction can be explained by a purpose other than the use of the information.
From the official text
Points at issue
미공개정보의 이용행위 금지에 관한 증권거래법 제188조의2 제2항에 정한 ‘투자자의 투자판단에 중대한 영향을 미칠 수 있는 정보’의 의미 및 그 정보의 생성시기
Unofficial English translation
The meaning of 'information that may have a significant impact on an investor's investment decision' as provided in Article 188-2, paragraph (2) of the Securities and Exchange Act prohibiting the use of undisclosed information, and the time at which such information comes into existence
Summary of the holding
증권거래법 제188조의2 제2항에 정한 ‘투자자의 투자판단에 중대한 영향을 미칠 수 있는 정보’란, 같은 법 제186조 제1항 제1호 내지 제12호에 유형이 개별적으로 예시되고 제13호에 포괄적으로 규정되어 있는 ‘법인의 경영·재산 등에 관하여 중대한 영향을 미칠 사실’들 가운데에서, 합리적인 투자자라면 그 정보의 중대성과 사실이 발생할 개연성을 비교 평가하여 판단할 경우 유가증권의 거래에 관한 의사 결정에서 중요한 가치를 지닌다고 생각하는 정보를 가리킨다. 한편, 일반적으로 법인 내부에서 생성되는 중요정보란 갑자기 완성되는 것이 아니라 여러 단계를 거치는 과정에서 구체화되는 것으로서, 중요정보의 생성시기는 반드시 그러한 정보가 객관적으로 명확하고 확실하게 완성된 경우를 말하는 것이 아니라, 합리적인 투자자의 입장에서 그 정보의 중대성과 사실이 발생할 개연성을 비교 평가하여 유가증권의 거래에 관한 의사결정에서 중요한 가치를 지닌다고 생각할 정도로 구체화되면 그 정보가 생성된 것이다.
Order
상고를 모두 기각한다.
Unofficial English translation
All appeals are dismissed.
Provisions referred to
증권거래법 제186조 제1항, 제188조의2 제2항
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.
Back to the ledger