Open Decision Ledger · Capital markets & finance
Whether an Act of Recommending a Stock by a Securities Broadcasting Expert Who Concealed the Fact of a Prior Purchase Constitutes Unfair Trading
Translated from the Korean original. Read the Korean
Supreme Court, Apr. 7, 2017, 2015Do760 (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
Does an act of recommending a purchase without disclosing the interest that one may buy the recommended stock in advance and sell it after the recommendation constitute an act of using unfair means, etc. under Article 178 (1) subparagraph 1 of the Financial Investment Services and Capital Markets Act and an act of using deception under paragraph (2) of the same Article?
Holding
The Supreme Court viewed such conduct as an act of using unfair means, plans, or schemes, and at the same time as an act of using deception. The reason was that it is an act that omits the indication of a personal interest, thereby giving the impression that the recommendation is made on an objective basis and inducing transactions.
Points at issue, verbatim
추천하는 증권을 자신이 선행매수하여 보유하고 있고 추천 후에 이를 매도할 수도 있다는 그 증권에 관한 자신의 이해관계를 표시하지 않은 채 그 증권의 매수를 추천하는 행위가 자본시장과 금융투자업에 관한 법률 제178조 제1항 제1호에서 말하는 ‘부정한 수단, 계획, 기교를 사용하는 행위’ 및 같은 조 제2항에서 정한 ‘위계의 사용’에 해당하는지 여부(적극)
Unofficial English translation
Whether an act of recommending the purchase of a security, without indicating one's interest in that security, namely, that one has pre-purchased and holds the security being recommended and may sell it after the recommendation, constitutes an "act of using unfair means, schemes, or tricks" as referred to in Article 178, paragraph (1), subparagraph 1 of the Financial Investment Services and Capital Markets Act and the "use of deception" prescribed in paragraph (2) of the same Article (affirmative)
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
Existing test applied Read from the decision
따라서 이 부분 공소사실 기재 행위는 자본시장법 제178조 제1항 제1호와 같은 조 제2항에서 정한 행위이다.
Unofficial English translation
Therefore, the act described in this part of the indictment is an act prescribed in Article 178, paragraph (1), subparagraph 1 of the Financial Investment Services and Capital Markets Act and paragraph (2) of the same Article.
Factors
- 투자자문업자, 증권분석가, 언론매체 종사자, 투자 관련 웹사이트 운영자 등
- 추천하는 증권을 자신이 선행매수하여 보유하고 있고
- 추천 후에 이를 매도할 수도 있다는 그 증권에 관한 자신의 이해관계를 표시하지 않은 채
- 부정한 수단, 계획, 기교를 사용하는 행위
- 위계의 사용
Unofficial English translation
• investment advisers, securities analysts, persons engaged in the news media, operators of investment-related websites, etc.
• that one has pre-purchased and holds the security being recommended, and
• without indicating one's interest in that security, namely, that one may sell it after the recommendation,
• an act of using unfair means, schemes, or tricks
• use of deception
Relation to precedent
Follows earlier decisions Stated in the decision
대법원 2017. 3. 30. 선고 2014도6910 판결 참조
Unofficial English translation
See Supreme Court Decision 2014Do6910 decided March 30, 2017
Decisions referred to
대법원 2017. 3. 30. 선고 2014도6910 판결(공2017상, 930)
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
Where the stock price moves due to external factors, as with politically themed stocks, how is the relationship between a recommendation that omits disclosure of an interest and trading profits determined?
If Article 178 of the Financial Investment Services and Capital Markets Act is amended, or if a provision directly regulating front-running by similar investment advisory business operators is introduced, this reading will be checked again.
Cross-family AI independent reading & axis check
6 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-16
A comparison with an independent reading by another family of AI (GPT-6 Astra), which read only the original text without seeing the first reading, showed that 6 of the 8 axes matched, while the readings diverged on the 4th axis (Form of the test) and the 8th axis (Open question and revisit condition).
Axis 4 (Form of the test): Primary “Existing test applied” vs Independent “Elements stated”
Since the original text sets out the legal characterization of a recommendation that omits disclosure of an interest and reverses and remands, the first reading may focus on the application of law to that conduct, while the independent reading may focus on the conditions constituting unlawfulness.
자신의 이해관계를 표시하지 않은 채 그 증권의 매수를 추천하는 행위Axis 8 (Open question and revisit condition): Primary “Where the stock price moves due to external factors, as with politically themed stocks, how is the relationship between a recommendation that omits disclosure of an interest and trading profits determined?” vs Independent “How specifically must the recommender indicate the fact of holding and the possibility of selling in order for the interest to be regarded as sufficiently disclosed?”
The first reading asks about the relationship between the recommendation and trading profits where there are external factors causing stock price movements, while the independent reading asks about the degree of specificity required for disclosure of the interest.
추천하는 증권을 자신이 선행매수하여 보유하고 있고 추천 후에 이를 매도할 수도 있다는 그 증권에 관한 자신의 이해관계를 표시하지 않은 채 그 증권의 매수를 추천하는 행위Raw 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 rejected both the use of deception and the use of unfair means, etc., and affirmed the not guilty judgment of the court of first instance, on the grounds that there was no false statement in the broadcast content, that at the time there was no provision prohibiting front-running by similar investment advisory business operators and no duty under the principle of good faith to disclose the fact of the prior purchase, that the stock in question was a politically themed stock that fluctuated irrespective of the recommendation, and that there was no agreement with management or accomplice. It found it difficult to accept the purchase recommendation as to paid members of the Internet securities broadcasting cafe.
Supreme Court standard: The Supreme Court accepted the court below's fact-finding as to the Internet securities broadcasting cafe portion, but as to the portion using the broadcast, it held, under the legal principle of Supreme Court Decision 2014Do6910, that a purchase recommendation without disclosure of the interest constitutes an act falling under Article 178 (1) subparagraph 1 and (2). It reversed and remanded, holding that the court below's maintenance of the not guilty verdict without further deliberating on whether the recommendation omitted disclosure of the interest constituted a misapprehension of legal principles and failure to exhaust deliberations.
Distinguishing conditions
- Where the recommender disclosed to investors the interest consisting of a prior purchase of the recommended stock and the possibility of selling it after the recommendation
- Where the recommender did not hold the stock at the time of the recommendation, or traded it at a time unrelated to the recommendation
- Where the act of recommendation itself is not established (as in a case such as the one where the court below did not accept the purchase recommendation as to the Internet securities broadcasting cafe portion)
Record verification notes
Before asserting the same conclusion, it must first be checked whether the sequence of the recommender's purchase date, recommendation date, and sale date is confirmed in the record, and whether the interest was disclosed in any manner, including on the broadcast.
From the official text
Points at issue
투자자문업자, 증권분석가, 언론매체 종사자, 투자 관련 웹사이트 운영자 등이, 추천하는 증권을 자신이 선행매수하여 보유하고 있고 추천 후에 이를 매도할 수도 있다는 그 증권에 관한 자신의 이해관계를 표시하지 않은 채 그 증권의 매수를 추천하는 행위가 자본시장과 금융투자업에 관한 법률 제178조 제1항 제1호에서 말하는 ‘부정한 수단, 계획, 기교를 사용하는 행위’ 및 같은 조 제2항에서 정한 ‘위계의 사용’에 해당하는지 여부(적극)
Unofficial English translation
Whether an act by an investment adviser, securities analyst, media worker, operator of an investment-related website, etc. of recommending the purchase of a security, without indicating one's interest in that security, namely, that one has pre-purchased and holds the security being recommended and may sell it after the recommendation, constitutes an "act of using unfair means, schemes, or tricks" as referred to in Article 178, paragraph (1), subparagraph 1 of the Financial Investment Services and Capital Markets Act and the "use of deception" prescribed in paragraph (2) of the same Article (affirmative)
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
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
자본시장과 금융투자업에 관한 법률 제178조 제1항 제1호, 제2항, 구 자본시장과 금융투자업에 관한 법률(2013. 5. 28. 법률 제11845호로 개정되기 전의 것) 제443조 제1항 제8호, 제9호
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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