Open Decision Ledger · Capital markets & finance
Whether Information on a Deterioration in Year-End Financial Results Constitutes Material Undisclosed Information and the Standard for Determining Use of Information
Translated from the Korean original. Read the Korean
Supreme Court, Oct. 31, 2017, 2015Do3707 (judgment)
No holding summary · checked against points at issue. The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Case name: 자본시장과금융투자업에관한법률위반
Official text on the National Law Information Center
Question
If the chairperson of a company knew of information that the current-year net income would turn into a deficit and sold shares before disclosure, does this constitute the use of material undisclosed information?
Holding
The Supreme Court held that year-end closing information showing a turnaround from surplus to a deficit, with a large magnitude of decrease, is important information that may have a significant impact on investment judgment, and that it constitutes undisclosed information until it is disclosed by the determination of the corporation. Whether the information was used is determined by comprehensively considering the circumstances of acquisition, the economic situation, the timing and method of the transaction, and other factors, and the Supreme Court affirmed the court below's finding of use under this standard.
Points at issue, verbatim
어떤 정보가 당해 법인의 의사로 대통령령으로 정하는 방법에 따라 공개되기까지는 미공개중요정보 이용행위 금지의 대상이 되는 정보에 속하는지 여부(적극)
Unofficial English translation
Whether information belongs to the information subject to the prohibition of the use of material nonpublic information until it is disclosed in a manner prescribed by Presidential Decree by the decision of the corporation concerned (affirmative)
Disposition
Dismissed Stated in the decision
상고를 기각한다.
Unofficial English translation
The appeal is dismissed.
Form of the test
Existing test applied Read from the decision
원심판결 이유를 앞에서 본 법리와 적법하게 채택한 증거에 비추어 보면
Unofficial English translation
When the reasons for the judgment of the court below are considered in light of the legal principle examined above and the evidence lawfully admitted,
Factors
- 당해 법인의 의사로 대통령령으로 정하는 방법에 따라 공개되기까지는
- 미공개중요정보를 이용하였다고 하기 위한 요건 및 이에 해당하는지 판단하는 기준
- 제174조 제1항에서 정한
Unofficial English translation
• until it is disclosed in a manner prescribed by Presidential Decree by the decision of the corporation concerned
• The requirements for holding that material nonpublic information has been used, and the criteria for determining whether such use has occurred
• provided in Article 174(1)
Relation to precedent
Follows earlier decisions Stated in the decision
대법원 2017. 1. 25. 선고 2014도11775 판결
Unofficial English translation
Supreme Court Decision 2014Do11775 decided January 25, 2017
Decisions referred to
[1][2] 대법원 2017. 1. 12. 선고 2016도10313 판결(공2017상, 422) / [1][3] 대법원 2017. 1. 25. 선고 2014도11775 판결(공2017상, 490) / [2] 대법원 2000. 11. 24. 선고 2000도2827 판결(공2001상, 212), 대법원 2006. 5. 12. 선고 2004도491 판결
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
Even where a stock is classified as a theme stock and factors other than results greatly drive the stock price, can the importance of year-end financial results information be recognized to the same degree?
This reading will be checked again if the provisions of the former Financial Investment Services and Capital Markets Act Article 174 paragraph (1) concerning important information or the method of disclosure are amended, or if subsequent decisions emerge concerning the standard for determining the use of information.
Cross-family AI independent reading & axis check
6 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-16
In comparing the first reading with an independent reading by another AI model (GPT-6 Astra), which read only the original text without seeing the first reading, 6 of the 8 axes matched, and the readings diverged on Axis 4 (Form of the test) and Axis 8 (Open question and revisit condition).
Axis 4 (Form of the test): Primary “Existing test applied” vs Independent “Elements stated”
Since the Holdings states the meaning of important information and the requirements for its use, while the order dismisses the final appeal, the first reading may be seen as focusing on application to the specific transaction, and the independent reading on general requirements.
미공개중요정보를 이용하였다고 하기 위한 요건 및 이에 해당하는지 판단하는 기준Axis 8 (Open question and revisit condition): Primary “Even where a stock is classified as a theme stock and factors other than results greatly drive the stock price, can the importance of year-end financial results information be recognized to the same degree?” vs Independent “Where there is a trading plan fixed before the information was obtained, by what standard can the influence of that information on the trading decision be distinguished?”
The first reading asks about the importance of year-end closing information for theme stocks, while the independent reading asks for the standard for distinguishing the influence of information in transactions where a prior trading plan exists.
어떤 정보가 당해 법인의 의사로 대통령령으로 정하는 방법에 따라 공개되기까지는 미공개중요정보 이용행위 금지의 대상이 되는 정보에 속하는지 여부(적극)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 turnaround of net income from surplus to a deficit and the large magnitude of decrease were major management matters subject to reporting under the disclosure regulations, and that the stock price fell substantially more on the day after disclosure than those of other theme stocks, and on these and other grounds treated the information as important information. Further, the court below held that the information was undisclosed because it was created on or around January 11, 2012 and was made public through the disclosure of February 13, 2012, which was after the defendant's sale, and, given that the paid-in capital increase was only at the consideration stage and that the defendant held a considerable deposit balance, the court below rejected the assertion that funds were being raised for the paid-in capital increase and found that the information had been used.
Supreme Court standard: The Supreme Court confirmed the existing decisions concerning the meaning of important information, the regulatory reach of information before disclosure, and the comprehensive standard for determining the use of information, and, finding no misapprehension of legal principles or violation of the principle of free evaluation of evidence in the judgment of the court below, dismissed the final appeal. As to the assertion concerning loss avoidance, the Court stated that it had not been raised as a ground of appeal and was raised for the first time at the final appeal stage, and therefore could not serve as a valid ground for final appeal.
Distinguishing conditions
- A case where, at the time of the sale, the information had already been disclosed by the determination of the corporation in the manner so determined
- A case where, in light of the timing and method of the transaction, the financial circumstances, and other factors, a settled transaction motive unrelated to the information is recognized
- A case where the magnitude of the change in the information is small and it is difficult to regard it as having a significant impact on the investment judgment of a reasonable investor
Record verification notes
Before asserting the same conclusion, one needs to check the sequence in time between the point of recognition of the information and the point of disclosure at the time of the transaction, whether there was any other economic need to expedite the transaction, and whether the stock price movement is explained by factors other than the information.
From the official text
Points at issue
[1] 미공개중요정보 이용행위 금지규정인 구 자본시장과 금융투자업에 관한 법률 제174조 제1항에서 정한 ‘중요정보’의 의미 [2] 어떤 정보가 당해 법인의 의사로 대통령령으로 정하는 방법에 따라 공개되기까지는 미공개중요정보 이용행위 금지의 대상이 되는 정보에 속하는지 여부(적극) [3] 미공개중요정보를 이용하였다고 하기 위한 요건 및 이에 해당하는지 판단하는 기준
Unofficial English translation
[1] The meaning of "material information" as provided in Article 174(1) of the former Financial Investment Services and Capital Markets Act, which prohibits the use of material nonpublic information [2] Whether information belongs to the information subject to the prohibition of the use of material nonpublic information until it is disclosed in a manner prescribed by Presidential Decree by the decision of the corporation concerned (affirmative) [3] The requirements for holding that material nonpublic information has been used, and the criteria for determining whether such use has occurred
Summary of the holding
The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Order
상고를 기각한다.
Unofficial English translation
The appeal is dismissed.
Provisions referred to
[1] 구 자본시장과 금융투자업에 관한 법률(2013. 5. 28. 법률 제11845호로 개정되기 전의 것) 제174조 제1항, 제443조 제1항 제1호 [2] 구 자본시장과 금융투자업에 관한 법률(2013. 5. 28. 법률 제11845호로 개정되기 전의 것) 제174조 제1항, 제443조 제1항 제1호 [3] 구 자본시장과 금융투자업에 관한 법률(2013. 5. 28. 법률 제11845호로 개정되기 전의 것) 제174조 제1항, 제443조 제1항 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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