Open Decision Ledger · Capital markets & finance
Meaning of Unfair Means and Deception in Fraudulent Unfair Trading, and the Method of Assessing the Dissemination of False Disclosures and Press Releases
Translated from the Korean original. Read the Korean
Supreme Court, June 8, 2017, 2016Do3411 (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·국회에서의증언·감정등에관한법률위반·허위공문서작성·허위작성공문서행사·직권남용권리행사방해·주식회사의외부감사에관한법률위반·공인회계사법위반·특정경제범죄가중처벌등에관한법률위반(배임)·외국환거래법위반
Official text on the National Law Information Center
Question
What do "unfair means, scheme or artifice" and "deception" under Article 178 of the former Financial Investment Services and Capital Markets Act signify, and how are transaction-relatedness, whether a statement is false or deceptive, and the purpose of inducing fluctuations in market price determined?
Holding
Unfair means, scheme or artifice refers to any means recognized as unfair in accordance with generally accepted social norms, and deception refers to means intended to induce a certain act by defrauding the counterparty to a transaction or unspecified investors. The Supreme Court maintained the judgment of the court below, which found the dissemination of false disclosures and press releases, among others, to be guilty, in accordance with the established legal principle that a determination must be made under an objective standard by comprehensively considering the actor's position, the motive and circumstances of the statement, the reasonable basis for the forecast information, the risk of inducing misapprehension, the subsequent conduct, and the trend of the stock price.
Points at issue, verbatim
구 자본시장과 금융투자업에 관한 법률 제178조 제1항 제1호에서 정한 ‘부정한 수단, 계획 또는 기교’와 같은 조 제2항에서 정한 ‘위계’의 의미
Unofficial English translation
The meaning of 'deceitful means, schemes, or artifices' as provided in Article 178 (1) 1 of the former Financial Investment Services and Capital Markets Act and of 'deception' as provided in paragraph (2) of the same Article
Disposition
Dismissed Stated in the decision
상고를 모두 기각한다.
Unofficial English translation
All appeals are dismissed.
Form of the test
Circumstances weighed Stated in the decision
그 행위 전후의 제반 사정 등을 종합하여 객관적인 기준에 의하여 판단하여야 한다
Unofficial English translation
it must be determined by objective criteria upon an overall consideration of all the circumstances before and after the act
Factors
- 금융투자상품의 매매 등 거래와 관련한 행위인지
- 부정한 수단, 계획 또는 기교인지
- 거짓이나 위계인지
- 시세의 변동을 도모할 목적이 있는지
Unofficial English translation
• Whether it is an act relating to the trading, etc. of financial investment products
• Whether it constitutes deceitful means, schemes, or artifices
• Whether it constitutes a falsehood or deception
• Whether it is committed for the purpose of bringing about a fluctuation in market prices
Relation to precedent
Follows earlier decisions Stated in the decision
대법원 2001. 1. 19. 선고 2000도4444 판결, 대법원 2011. 3. 10. 선고 2008도6335 판결 등 참조
Unofficial English translation
See Supreme Court Decision 2000Do4444 decided January 19, 2001, Supreme Court Decision 2008Do6335 decided March 10, 2011, etc.
Decisions referred to
대법원 2001. 1. 19. 선고 2000도4444 판결(공2001상, 578), 대법원 2011. 3. 10. 선고 2008도6335 판결(공2011상, 765), 대법원 2011. 7. 14. 선고 2011도3180 판결(공2011하, 1686), 대법원 2011. 10. 27. 선고 2011도8109 판결(공2011하, 2504)
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
Where fraudulent unfair trading is recognized, to what extent must causation between the act in violation and the fluctuation in stock price be proved before the unjust gain underlying the aggravated punishment is recognized?
If the text of Article 178 of the former Financial Investment Services and Capital Markets Act is amended, or if the Supreme Court determines the method of assessing unfair means and deception differently, this reading will be reviewed again.
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 by another AI model (GPT-6 Astra), which read only the original text without seeing the first reading, 7 of the 8 axes agreed, and the readings diverged on the eighth axis (Open question and revisit condition).
Axis 8 (Open question and revisit condition): Primary “Where fraudulent unfair trading is recognized, to what extent must causation between the act in violation and the fluctuation in stock price be proved before the unjust gain underlying the aggravated punishment is recognized?” vs Independent “To what degree must the reasonable basis for a forecast of future performance be lacking before it is recognized as unfair trading?”
The first reading asks about proof of the unjust gain for aggravated punishment and causation, while the independent reading asks about the boundary at which a lack of grounds for a forecast of future performance becomes unfair trading.
구 자본시장과 금융투자업에 관한 법률 제178조 제1항 제1호에서 정한 ‘부정한 수단, 계획 또는 기교’와 같은 조 제2항에서 정한 ‘위계’의 의미Raw 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 Defendants 7, 8, and 2, in collusion with Non-indicted 1, used unfair means through false disclosures, false press releases, press interviews, and notices on the company website, and made false representations in the Report on Large Holdings or used deception; it therefore reversed the not guilty verdict of the trial court and rendered a guilty verdict. However, it found the approximately KRW 90 billion in unjust gain not guilty on the merits for lack of Evidence, and found not guilty the portion concerning the distribution of the first and second press releases in the name of the Ministry of Foreign Affairs and Trade and the related counts against Defendant 1, on the ground that falsity, awareness, and collusion were not proved. As to the breach of trust arising from the payment of a business security deposit of KRW 3 billion and an advance payment of KRW 6,930,710,400, it reversed the trial court and found it guilty.
Supreme Court standard: After confirming the established legal principle concerning the meaning of unfair means and deception and the method of comprehensive and objective assessment, the Supreme Court found that neither the guilty findings nor the not guilty findings of the court below involved a departure from the limits of the principle of free evaluation of evidence or a misunderstanding of legal principle, and therefore dismissed the final appeals of both the defendants and the prosecution.
Distinguishing conditions
- Where the statement at issue was a forecast concerning future financial condition or business performance, made in good faith on the basis of reasonable grounds
- Where the content of the statement or representation carried no risk of inducing misapprehension in the counterparty to a transaction or in unspecified investors, or where the actor's awareness of the falsity was not proved
- Cases to which the Financial Investment Services and Capital Markets Act as amended on May 28, 2013 applies, where the structure of the provisions or the penalty provisions differs
Record verification notes
Before asserting the same conclusion, it is necessary to check whether the actor's position and motive for the statement, and the conduct and stock price trend following the statement, support collusion and awareness of falsity, and whether there is Evidence capable of specifying the amount of unjust gain within the range of causation with the act in violation.
From the official text
Points at issue
구 자본시장과 금융투자업에 관한 법률 제178조 제1항 제1호에서 정한 ‘부정한 수단, 계획 또는 기교’와 같은 조 제2항에서 정한 ‘위계’의 의미 및 같은 조 제1항 제1호, 제2호, 제2항에서 금융투자상품의 매매 등 거래와 관련한 행위인지, 부정한 수단, 계획 또는 기교인지, 거짓이나 위계인지, 시세의 변동을 도모할 목적이 있는지 등을 판단하는 방법
Unofficial English translation
The meaning of 'deceitful means, schemes, or artifices' as provided in Article 178 (1) 1 of the former Financial Investment Services and Capital Markets Act and of 'deception' as provided in paragraph (2) of the same Article, and the method of determining under Article 178 (1) 1, (1) 2, and (2) of the same Act whether an act is an act relating to the trading, etc. of financial investment products, whether it constitutes deceitful means, schemes, or artifices, whether it constitutes a falsehood or deception, and whether it is committed for the purpose of bringing about a fluctuation in market prices, etc.
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 모두 기각한다.
Unofficial English translation
All appeals are dismissed.
Provisions referred to
구 자본시장과 금융투자업에 관한 법률(2013. 5. 28. 법률 제11845호로 개정되기 전의 것) 제178조 제1항 제1호, 제2호, 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.
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