Lee & Ko is truly excited to share a follow up on the financial industry related high profile criminal case in Korea, where Lee & Ko continued to successfully secure a not guilty judgment at the appellate court for our client, a global banking and financial services company.

Key takeaways:

  • This ruling is highly significant as it marks the first case prosecuted under the amended Financial Investment Services and Capital Markets Act of Korea (FISCMA), which included introductions to criminal penalties for illegal short-selling violations, setting an important precedent. The case involved novel legal issues, including the point of consummation of a short sales violation.
  • As did the district court, the appellate court also accepted most of the legal arguments presented by Lee & Ko. The appellate court held that, as found by the 1st instance court, short sale (criminal) violations are consummated when a short sale contract is concluded, and that the lower court did not err on the issue of whether the constituent acts exist as alleged in the indictment, based on the reasons that were argued by Lee & Ko.
  • Initially, this case was handled by another leading Korean law firm during the Financial Supervisory Service’s investigation stage. The Financial Supervisory Service imposed a fine of approximately 7.5 billion Korean won and a criminal complaint was subsequently filed. Following the client’s decision to reconsider legal counsel representation, Lee & Ko was retained as lead counsel to handle the case, managing the client’s overall defense strategies from the remaining investigation stage and throughout the trial proceedings.
  • From the client's perspective, this case was of utmost importance since a criminal conviction for violating the FISCMA would have significant implications from business and reputational perspectives. Additionally, given that a foreign financial institution was prosecuted, the case has drawn considerable attention both domestically and internationally.
  • Lee & Ko deployed key members of the White Collar Defense Team, the International Litigation Team and the Financial Compliance Team, and leveraged its substantial knowledge of the capital markets regulations based on decades of practice experience in this area. Dozens of professionals from several practice groups collaborated on this matter and following consolidated and dedicated efforts, Lee & Ko was able to secure a successful defense for the client once again at the appellate court.
  • Criminal prosecutions could be extremely intimidating to a foreign institution that is not familiar with the legal regime in Korea. Lee & Ko demonstrated customized support and advice, engaged in establishing sophisticated strategies for the defense, utilized its prior experience to anticipate the direction of the criminal complaint and advised in both procedural and substantive aspects of the case to a foreign client unfamiliar with the Korean legal (criminal) system. Our team members include former judges, prosecutors and law clerks who are bilingual and fluent English speakers.

This ruling, which carries significant weight as a appellate court decision, is expected to significantly affect the industry in general and similar proceedings involving short-selling issues. Having led this matter to continuously successful defense, especially in a case where the Financial Supervisory Service initially imposed a fine, Lee & Ko has added another monumental victory to its breadth of experience.

If you have any questions regarding this case, please contact below:

Hyunjoo OH (hyunjoo.oh@leeko.com) Capital Markets Group
Yangseok JEON (yangseok.jeon@leeko.com) Criminal Defense Group
Kiri YI (kiri.yi@leeko.com) International Litigation Group
Joonah JANG (joonah.jang@leeko.com) Capital Markets Disputes Group
Yeonwoo LEE (yeonwoo.lee@leeko.com) International Litigation Group

For more information, please visit our website: www.leeko.com