LIN NEWS
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LIN NewsLIN secures landmark victory for option investors, overturning lower court ruling in Nikkei 225 option case against major securities firm"LIN persuaded the court to invalidate derivatives standard agreement that allowed domestic brokerage firms to sell off its client’s position without margin calls" The Seoul High Court dismissed a lawsuit seeking damages filed by KB Securities against Winners Asset Management ("Winners"), while partially upholding a counterclaim filed by Winners and investors against KB Securities for damages resulting from unlawful counter trading by KB. The is the first case where the court ruled that counter trading implemented by securities firms without margin calls, in accordance with the general terms agreement utilized by most of all Korean securities firms for their clients, is unlawful under the Korean finance law. This ruling is expected to have a significant impact. Korean investors engaged in trading Nikkei 225 index options via accounts established with KB Securities. On February 29, 2020, amidst significant downturn in the global stock market prompted by the coronavirus pandemic, volatility peaked, leading to adverse valuation impacts on the positions held by Korean investors during the overnight session at the Osaka Exchange in Japan. As the valuation of the investors’ positions reached a predefined threshold, KB Securities implemented counter trades to initiate the forced liquidation of all investors' positions, in accordance with the standard agreement utilized by KB for its clientele. The standard agreement included a provision crafted by the Korea Financial Investment Association, stipulating that counter trades may be executed without the necessity of margin calls if the cumulative valuation of the client’s position falls below 20% of the custody margin due to sharp fluctuations in intraday market prices. The investors adversely affected by counter trades comprised four private funds under the management of Winners Management along individual and corporate investors who executed discretionary investment contracts with Winners. As a result of KB Securities' counter trades, all the option contracts held by the investors were liquidated overnight, resulting in the complete loss of their investments and incurring of additional liabilities totaling KRW 80 billion. The investors filed a lawsuit asserting that KB Securities' implementation of counter trading was unlawful. Simultaneously, KB Securities filed lawsuits contending that the investors are liable to compensate for the losses incurred due to the liquidation of their positions and unlawful operation of Winners. One of the primary issues addressed at the trial court was the validity of the standard agreement under under the Terms and Conditions Regulation Act, among other issues. The trial court ruled against the investors. Upon appeal, Law Firm LIN entered the case to advocate for the investors and introduced a novel argument grounded in financial law. LIN contended before the appellate court that the counter trading constituted discretionary trading, a practice typically prohibited under the Capital Markets Act with some exceptions, and that the specific countertrading in question did not qualify for any exceptions under the Act. Our team, comprising litigation and finance lawyers with diverse experiences and profound expertise in financial products from law firms, multinational financial institutions, and court settings, contended that the counter trading conducted without margin calls under the standard terms agreement violateed the Capital Market Act. LIN argued that the securities firm essentially functions as a broker in option transactions and that investment judgment should rightfully remain within the domain of investors, rather than brokers. We also argued that such practices failed to align with the underlying policies behind the finance laws designed to safeguard investors. Furthermore, the LIN team substantiated the argument regarding the impermissibility of such counter trading in other developed capital markets by presenting compelling evidence and expert witness testimony. In this case, the appellate court adopted a unique approach to witness testimony. The court facilitated simultaneous testimony by two expert witnesses, with each witness appointed by each party. These witnesses were asked the same questions concurrently, allowing for a comparative and dynamic assessment of their responses. The appellate court The appellate meticulously considered the significance and ramifications of the outcome of this case on the capital market. Through deliberate and thorough deliberation the court ensured a comprehensive evaluation of the matter at issue. After nearly a year of proceedings, the appellate court ruled in favor of the investors. The court decided that the Capital Markets Act prohibites trading by investment intermediaries except in exceptional circumstances. Considering the legislative history and policies behind the relevant provisions of the Capital Markets Act, which aim to protect investors and promote a sound trading order, the provision in question under the standard terms agreement was deemed to violate the Capital Markets Act and therefore cannot be recognized as effective. The appellate decision is expected to have significant implications for the financial and legal communities. Some large securities firms are reportedly responding to the ruling by conducting an internal review of their terms and conditions and system improvements. The lawyers at LIN, equipped with extensive knowledge and experience across a diverse range of financial markets, are committed to safeguarding and advancing the best interests of our clients. Our efforts are directed towards promoting fairness and fostering the development of capital markets. If you have any inquiries, please do not hesitate to reach out to lawyers at LIN. They will be more than happy to assist you.2024.03.05
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Recruitment PersonnelNew RecruitmentsWe are pleased to welcome Beom Jin Park (Partner), Chae Yun Kim (Partner), and Woohyuk Sky Ju (Foreign Legal Consultant (US)) as new members of our Firm. 1. Beom Jin Park, Partner - Korea University, B.A. in Economics - University of Michigan Ann Arbor, Ross School of Business, M.B.A. - Chungnam National University, School of Law, J.D. - Bar Examination (4th) - Seoul National University, Center for Financial Law Former) Samsung Corning Corporation Former) Citibank Korea, Card Division Former) Coca-Cola Business Solution Inc. Former) Shinhan Bank, Business Planning Team / Shinhan Financial Group, Future Strategy Research Center Former) Lim, Chung & Suh Former) Jehyun, Partner Former) E-UM Private Equity, Compliance Officer Current) Lin Mr. Park joined Samsung Group in 1999 and worked at Samsung Corning Co., Ltd., handling HR, strategic planning, and tasks related to Corning Incorporated in the United States. In 2004, he moved to the U.S. and obtained a Master of Business Administration (MBA) from the University of Michigan Ann Arbor, one of the top 10 business schools in the country. During his MBA program, he completed industry-academia cooperation projects and internships at Coca-Cola Business Solution Inc. and Citibank (Card Business) in the United States, transitioning his career into the financial sector. In 2006, he worked in the Business Planning Team at Shinhan Bank and the Future Strategy Research Center of Shinhan Financial Group. During his tenure at Shinhan Bank, he was involved in consulting projects aimed at developing strategies for banks and financial holding companies in response to the global financial crisis in 2008 and the implementation of the Capital Market Consolidation Act in 2009. He handled important tasks such as formulating strategies for long-term growth of the bank and initiatives for green banking. He also co-authored reports with the Financial Supervisory Service for publication. After pursuing graduate studies in law to deepen his understanding and expertise in financial regulation and legal matters, Mr. Park was admitted to the Korean Bar in 2015. Starting his career at Lim, Chung & Suh, he gained experience in various civil litigation cases, including claims for damages against investment management companies. In the same year, he moved to Jehyun, a law firm, specializing in finance and transactions, where he worked until 2023. During this period, he served clients such as banks, financial investment companies, asset management companies, specialized credit finance companies, savings banks, and public power companies, providing legal advice on domestic and international real estate project financing, renewable energy project financing, asset securitization, syndication, distressed debt acquisition financing, as well as legal advice on fundraising and various development projects, corporate governance, and related litigation. At Lin, Mr. Park plans to leverage his diverse experience and unique strengths to primarily engage in transaction advisory services such as project finance and structured finance in real estate and development projects. 2. Chae Yun Kim, Partner - Seoul National University, Graduate School of Anthropology - Bar Examination (41st) - Judicial Training Institute (31st) - Northwestern University, School of Law, LL.M. Former) Head of Legal Department, KB Kookmin Bank Current) Lin Ms. Kim started her legal career as an in-house counsel at KB Kookmin Bank and served as team head of legal team, general manager of legal department, and head of legal division for 21 years. There, she worked on various legal advisory and litigation matters for the bank and its affiliates, including regulatory law issues, financial transactions, internal control, consumer protection, and domestic and international litigations. Ms. Kim also assisted in reviewing issues related to virtual asset transactions and establishing internal control procedures. Additionally, for several years, Ms. Kim supported the board of directors and management in decision-making by advising on various cases and issues arising from internal corporate governance, HR, labor, and corporate law. Ms. Kim also handled disputes between companies and various stakeholders, including shareholders, creditors, and customers, and provided creative solutions to minimize losses. At Lin, based on her broad knowledge and integrated practical experience, Ms. Kim will demonstrate a high level of expertise in corporate legal advisory, financial, and wealth management fields. 3. Woohyuk Sky Ju, Foreign Legal Consultant (US) - Chief Financial Officer Academy (CFO Strategy Course) at Seoul National University, 23rd Class - Korea Military Academy, Batch 61 - Military History - Bachelor of Business Administration, Korea Educational Development Institute - Texas Southern University, J.D. (Thurgood Marshall School of Law, Juris Doctor) Former) U.S. Attorney / Head of International Business Team at Law Firm Hanjoong Current) Mentoring and networking expert advisor for Startup Leapfrog Package, Gyeonggi Center for Creative Economy & Innovation Current) Expert advisor on international contracts/claims at the Korea International Trade Association Current) Advisor in the field of technology/management at the Gyeonggi Center for Creative Economy & Innovation (Advisory Committee Member) Current) Export consulting expert, Korea Agro-Fisheries & Food Trade Corporation Current) Lin Mr. Ju was the head of the International Business Team of Law Firm Hanjoong and has been practicing in the cross-border sector for about 14 years, primarily in the areas of international trade and immigration (immigration/visa for individuals and companies). He is currently an advisor in charge of international contracts/claims at the Korea International Trade Association (KITA), where he advises on trade disputes, and an expert in charge of corporate export consulting at Korea Agro-Fisheries & Food Trade Corporation. In particular, as part of a legal support project for startups, he has recently been providing preventive legal support for the establishment and operation of overseas subsidiaries, joint ventures, crowdfunding, foreign exchange transactions, international contracts, and import/export trade for a number of promising companies as an expert in the field of technology/management and as an advisor to the Gyeonggi Center for Creative Economy & Innovation in Pangyo Techno Valley. He is also an immigration (immigration/visa) expert who is familiar with entry & exit and waiver (non-immigration & immigration) application procedures in the field of immigration & international law for a client who has a record such as criminal violation, illegal immigration, smuggling, and false reporting/perjury, etc. At Lin, Mr. Ju plans to leverage his practical skills and experience to effectively utilize the rich international network of Lin’s international legal team, creating synergies. 4. New Associates We are pleased to announce the addition of Ho Jun Shin (7th Bar Examination), Yuna Kim (9th Bar Examination), Jin Hwan Seong (9th Bar Examination), Sang Hoon Lee (9th Bar Examination), Hyeonjun Choi (9th Bar Examination), Sun-A Yoon (U.S. Attorney, Washington, D.C.), and Han A Ryu (Australian Attorney) to meet the growing demand of our clients. Going forward, Lin promises to continuously recruit verified talents in various fields to ensure customer satisfaction.2024.01.31
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Select MattersLIN Wins an Injunction to Suspend the Validity of an Exclusive Contract on behalf of “LOONA”.LIN represented nine members of the girl group named “LOONA" (HeeJin, Kim Lip, JinSoul, Choerry, HaSeul, YeoJin, Yves, Olivia Hye, and Go Won) against their agency, Blockberry Creative, and obtained a favorable decision, allowing all members of the group to leave the agency. In January, nine members of "LOONA" filed an application for a temporary restraining order against the agency, and four members (HeeJin, Kim Lip, JinSoul, and Choerry) won the case because the revenue sharing clause in the agency contract was unfair, while the other five members (HaSeul, YeoJin, Yves, Olivia Hye, and Go Won) lost the case. The reason was that the five members (HaSeul, YeoJin, Yves, Olivia Hye, and Go Won) had changed some of the terms of the contract unlike the other four members (HeeJin, Kim Lip, JinSoul, and Choerry). The five members then filed an appeal, and on June 16, the Civil Division 5 of the Seoul High Court revoked the first court's decision and decided to grant the appeal in the appeal for a preliminary injunction to suspend the effectiveness of the exclusive contract filed by the five members (HaSeul, YeoJin, Yves, Olivia Hye, and Go Won) against the agency. LIN pointed out that Blockberry Creative had transferred some of its rights under the agency contract to its Japanese management company, Universal Japan, without the members' written consent, and the appellate court accepted the law firm's arguments, suspending the effectiveness of the agency contract pending judgment on the merits and deciding that the agency should not negotiate and conclude contracts with third parties for entertainment activities against the members' will, and should not request or interfere with the members' entertainment activities. This case was the result of a collaboration between the entertainment and sports teams of LIN. While Korea’s trade export deficit has been accumulating for more than a year, K-content exports reached $13 billion as of last year, and the status of K-contents is increasing day by day, so it is expected that there will be more cases in which artists will apply for the suspension of the effectiveness of exclusive contracts against their agencies, and the logic presented by LIN and the court's judgment recognizing it will be an important reference for similar cases in the future.2023.06.23