Open Decision Ledger · Capital markets & finance
Whether Risk-Hedging Transactions by a Securities Company Issuing Equity-Linked Securities May Constitute Interference with the Fulfillment of an Early Redemption Condition
Translated from the Korean original. Read the Korean
Supreme Court, May 14, 2015, 2013Da2757 (judgment)
Case name: 상환금
Official text on the National Law Information Center
Question
Where a securities company that issued equity-linked securities sells in large quantities at around the close of the market on an intermediate valuation date, at quotes below the reference price, thereby frustrating the fulfillment of the early redemption condition, may this be regarded as a legitimate delta hedge so that it does not constitute interference with the fulfillment of the condition contrary to the principle of good faith?
Holding
A securities company must, on valuation reference dates when its interests conflict with those of investors, conduct risk-hedging transactions reasonably in terms of timing and method, and must not interfere with the fulfillment of the condition by affecting the fair price formation of the underlying asset. The Supreme Court held that there is sufficient room to view the large-scale selling in this case as interference with the fulfillment of the condition contrary to the principle of good faith, effected by neglecting its duty to protect investors.
Summary of the holding, verbatim
약정 평가기준일의 기초자산 가격 또는 지수에 따라 투자자와의 사이에서 이해가 상충하는 때에는 그와 관련된 위험회피거래는 시기, 방법 등에 비추어 합리적으로 하여야 하며, 그 과정에서 기초자산의 공정한 가격형성에 영향을 끼쳐 조건의 성취를 방해함으로써 투자자의 이익과 신뢰를 훼손하는 행위를 하여서는 안 된다.
Unofficial English translation
Where, on the agreed valuation reference date, the price or index of the underlying asset places the securities company and the investor in a conflict of interest, the related hedging transactions must be conducted reasonably in view of their timing, method, and the like, and in the course thereof the securities company must not engage in any act that infringes upon the investor's interests and trust by affecting the fair formation of the price of the underlying asset and thereby obstructing the fulfillment of the condition.
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
그와 관련된 위험회피거래는 시기, 방법 등에 비추어 합리적으로 하여야 하며
Unofficial English translation
the related hedging transactions must be conducted reasonably in view of their timing, method, and the like, and
Factors
- 투자자와의 사이에서 이해가 상충하지 않도록 노력하고
- 이해상충이 불가피한 경우에는 투자자가 공정한 대우를 받을 수 있도록 적절한 조치를 취함으로써 투자자의 이익을 보호하여야 하며
- 시기, 방법 등에 비추어 합리적으로 하여야 하며
- 기초자산의 공정한 가격형성에 영향을 끼쳐 조건의 성취를 방해함으로써
- 장 종료 10분 전까지 기준가격을 상회하던
Unofficial English translation
• strive not to enter into a conflict of interest with the investor, and
• where a conflict of interest is unavoidable, protect the investor's interests by taking appropriate measures so that the investor receives fair treatment, and
• must be conducted reasonably in view of their timing, method, and the like, and
• by affecting the fair formation of the price of the underlying asset and thereby obstructing the fulfillment of the condition,
• which had exceeded the reference price until 10 minutes before the close of the market
Relation to precedent
States a new standard Read from the decision
증권회사가 약정 평가기준일의 기초자산 가격 또는 지수에 연계하여 투자수익이 결정되는 유가증권을 발행하여 투자자에게 판매한 경우에는
Unofficial English translation
Where a securities company has issued and sold to investors securities whose investment returns are determined by reference to the price or index of the underlying asset on the agreed valuation reference date,
Decisions referred to
None listed
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
Where interference with the fulfillment of the early redemption condition is recognized and the condition is deemed fulfilled, how is the maturity redemption amount already paid to the investor settled in a claim for early redemption?
We will re-examine this reading if the conflict-of-interest management provisions of the Financial Investment Services and Capital Markets Act are amended, or if the Supreme Court states a different test for interference with the fulfillment of the condition in risk-hedging transactions involving derivative-linked securities.
Cross-family AI independent reading & axis check
6 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-16
Compared with an independent reading by another affiliated AI (GPT-6 Astra), which read only the original text without seeing the first reading, 6 of the 8 axes agreed, 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”
The original text may be read as setting a new standard in that it sets out specific duties for risk-hedging transactions, but it may also be read as 'Cannot be determined' because it does not specify its relation to earlier decisions.
증권회사가 약정 평가기준일의 기초자산 가격 또는 지수에 연계하여 투자수익이 결정되는 유가증권을 발행하여 투자자에게 판매한 경우에는Axis 8 (Open question and revisit condition): Primary “Where interference with the fulfillment of the early redemption condition is recognized and the condition is deemed fulfilled, how is the maturity redemption amount already paid to the investor settled in a claim for early redemption?” vs Independent “Up to what scale of selling and what degree of price impact in risk-hedging transactions on the valuation date is still permitted as a reasonable transaction?”
The first reading asks about the settlement of the maturity redemption amount already paid once the condition is deemed fulfilled, while the independent reading asks about the limits of the scale and price impact of permitted risk-hedging transactions.
약정 평가기준일의 기초자산 가격 또는 지수에 따라 투자자와의 사이에서 이해가 상충하는 때에는 그와 관련된 위험회피거래는 시기, 방법 등에 비추어 합리적으로 하여야 하며, 그 과정에서 기초자산의 공정한 가격형성에 영향을 끼쳐 조건의 성취를 방해함으로써 투자자의 이익과 신뢰를 훼손하는 행위를 하여서는 안 된다.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 held that the defendant's act of selling in large quantities the ordinary shares of a third company at around the close of the market on the intermediate valuation date was a legitimate transaction for delta hedging conducted by a financial institution that issues equity-linked securities in order to manage its risks, and therefore, even though the redemption condition was not fulfilled as a result, it cannot be regarded as interference with the fulfillment of the condition contrary to the principle of good faith.
Supreme Court standard: The Supreme Court took the view that, on an intermediate valuation date when interests conflict, the selling should have been dispersed during the continuous trading session so as to minimize its impact on the determination of the closing price, and that large-scale selling in the single-price trading session should have been made at quotes not below the reference price. Noting that the defendant placed approximately 79% of its sell orders in the single-price trading session mostly at quotes below the reference price of 108,500 won, resulting in the closing price being determined at 108,000 won, the Supreme Court reversed and remanded, holding that the court below had misunderstood the legal principle concerning the duty of care under the principle of good faith in risk-hedging transactions.
Distinguishing conditions
- Where the price of the underlying asset on the valuation reference date is far from the redemption reference price, so that the possibility of the condition being fulfilled by the closing price and the conflict of interest are not great
- Where the hedging sales are dispersed during the continuous trading session or are made at quotes not below the reference price, so that their impact on the determination of the closing price is limited
- Where the decline in the closing price occurred mainly due to overall market supply and demand or external factors rather than the securities company's orders
Record verification notes
Before asserting the same conclusion, check the Records for the required sell quantity based on the delta value on the valuation date concerned, the proportion of orders placed in the single-price trading session and the quote levels, and the relationship between the immediately preceding price and the reference price, in order to examine whether the sell orders actually determined the closing price and the failure to fulfill the condition.
From the official text
Points at issue
[1] 증권회사가 약정 평가기준일의 기초자산 가격 또는 지수에 연계하여 투자수익이 결정되는 유가증권을 발행하여 판매한 경우, 위험회피거래 과정에서 이해가 상충하는 투자자에 대하여 부담하는 보호의무의 내용 [2] 갑 주식회사의 보통주를 기초자산으로 하여 중간평가일의 종가인 평가가격이 발행일의 종가인 기준가격보다 높거나 같을 경우 중도상환금을 지급하는 주가연계증권을 발행하여 을 등 투자자에게 판매한 병 증권회사가 중간평가일의 장 종료 무렵 기준가격에 미치지 못하는 가격으로 대량의 매도 주문을 함에 따라 장 종료 10분 전까지 기준가격을 상회하던 갑 회사의 보통주 가격이 기준가격 아래로 떨어져 중도상환조건의 성취가 무산된 사안에서, 병 회사의 행위가 신의성실에 반하여 중도상환조건 성취를 방해한 것이라고 볼 여지가 충분하다고 한 사례
Unofficial English translation
[1] The content of the duty of protection owed to investors whose interests conflict in the process of hedging transactions, where a securities company has issued and sold securities whose investment returns are determined by reference to the price or index of the underlying asset on the agreed valuation reference date [2] A case where C Securities Company, having issued and sold to B and other investors an equity-linked security, the underlying asset of which was the common stock of A Co., Ltd., providing for payment of an early redemption amount if the valuation price, being the closing price on the intermediate valuation date, was higher than or equal to the reference price, being the closing price on the issue date, placed a large volume of sell orders near the close of the market on the intermediate valuation date at prices below the reference price, whereby the price of A Co., Ltd.'s common stock, which had exceeded the reference price until 10 minutes before the close of the market, fell below the reference price and the fulfillment of the early redemption condition came to nothing, in which the court held that there was sufficient room to regard C Company's conduct as contrary to good faith and as having obstructed the fulfillment of the early redemption condition
Summary of the holding
[1] 민법 제2조, 제150조 제1항, 구 증권거래법(2007. 8. 3. 법률 제8635호 자본시장과 금융투자업에 관한 법률 부칙 제2조로 폐지) 제52조 제3호, 구 증권거래법 시행령(2008. 7. 29. 대통령령 제20947호 자본시장과 금융투자업에 관한 법률 시행령 부칙 제2조로 폐지) 제36조의3 등의 규정 취지에 비추어 보면, 증권회사는 유가증권의 발행, 매매 기타의 거래를 함에 있어 투자자의 신뢰를 저버리는 내용 또는 방법으로 권리를 행사하거나 의무를 이행하여 투자자의 보호나 거래의 공정을 저해하여서는 안 되므로 투자자와의 사이에서 이해가 상충하지 않도록 노력하고, 이해상충이 불가피한 경우에는 투자자가 공정한 대우를 받을 수 있도록 적절한 조치를 취함으로써 투자자의 이익을 보호하여야 하며, 정당한 사유 없이 투자자의 이익을 해하면서 자기 또는 제3자의 이익을 추구하여서는 안 된다. 따라서 증권회사가 약정 평가기준일의 기초자산 가격 또는 지수에 연계하여 투자수익이 결정되는 유가증권을 발행하여 투자자에게 판매한 경우에는, 증권회사가 기초자산의 가격변동에 따른 위험을 회피하고 자산운용의 건전성을 확보하기 위하여 위험회피거래를 한다고 하더라도, 약정 평가기준일의 기초자산 가격 또는 지수에 따라 투자자와의 사이에서 이해가 상충하는 때에는 그와 관련된 위험회피거래는 시기, 방법 등에 비추어 합리적으로 하여야 하며, 그 과정에서 기초자산의 공정한 가격형성에 영향을 끼쳐 조건의 성취를 방해함으로써 투자자의 이익과 신뢰를 훼손하는 행위를 하여서는 안 된다. [2] 갑 주식회사의 보통주를 기초자산으로 하여 중간평가일의 종가인 평가가격이 발행일의 종가인 기준가격보다 높거나 같을 경우 중도상환금을 지급하는 주가연계증권을 발행하여 을 등 투자자에게 판매한 병 증권회사가 중간평가일의 장 종료 무렵 기준가격에 미치지 못하는 가격으로 대량의 매도 주문을 함에 따라 장 종료 10분 전까지 기준가격을 상회하던 갑 회사의 보통주 가격이 기준가격 아래로 떨어져 중도상환조건의 성취가 무산된 사안에서, 병 회사의 행위가 을 등에 대한 투자자보호의무를 게을리한 것으로서 신의성실에 반하여 주가연계증권의 중도상환조건 성취를 방해한 것이라고 볼 여지가 충분한데도 이와 달리 본 원심판결에 위험회피거래에서의 신의칙상 주의의무 등에 관한 법리오해의 잘못이 있다고 한 사례.
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
[1] 민법 제2조, 제150조 제1항, 구 증권거래법(2007. 8. 3. 법률 제8635호 자본시장과 금융투자업에 관한 법률 부칙 제2조로 폐지) 제52조 제3호, 구 증권거래법 시행령(2008. 7. 29. 대통령령 제20947호 자본시장과 금융투자업에 관한 법률 시행령 부칙 제2조로 폐지) 제36조의3 [2] 민법 제2조, 제150조 제1항, 구 증권거래법(2007. 8. 3. 법률 제8635호 자본시장과 금융투자업에 관한 법률 부칙 제2조로 폐지) 제52조 제3호, 구 증권거래법 시행령(2008. 7. 29. 대통령령 제20947호 자본시장과 금융투자업에 관한 법률 시행령 부칙 제2조로 폐지) 제36조의3
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.
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