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Reform Party Representative Chon Ha-ram Loses Lawsuit Challenging 'Blind Trust' Order for Spouse's Stocks

[비즈한국] It has been confirmed that Chon Ha-ram, floor leader of the Reform Party, filed an administrative lawsuit to cancel a decision requiring him to place stocks held by his spouse into a blind trust, but ultimately lost the case. The court determined that considering Chon was a member of the National Assembly's Finance and Economy Planning Committee at the time, there was sufficient recognition of job-related conflict of interest.

'Job-relatedness' Recognized Even for Spouse's Stocks

The Seoul Administrative Court, 14th Division (Presiding Judge Lee Sang-deok), dismissed the lawsuit filed by floor leader Chon against the Stock Blind Trust Review Committee on the 29th of last month to cancel the decision recognizing job-relatedness. Chon is also responsible for covering the litigation costs.

In November 2024, Chon requested the cancellation of the Stock Blind Trust Review Committee's decision that his spouse's stock holdings were related to his duties. The stocks in question include about 10 items, such as Samsung Electronics005930 (common and preferred shares), LG Display034220, Naver, Mirae Asset Venture Investment100790, Samsung Heavy Industries010140, Sejong Telecom, Solus Advanced Materials, Aha, and Kakao. Unlisted stocks, such as 10,000 shares of Yanolja, were also included.

After entering the 22nd National Assembly in May of the same year, Chon was assigned to the Strategy and Finance Committee (now the Finance and Economy Planning Committee) and the Steering Committee. The Stock Blind Trust Review Committee decided that his duties were related to his stocks, noting that he was a member of a committee dealing with overall national economic and fiscal policy.

Members of the Finance and Economy Committee review bills and petitions related to the Ministry of Economy and Finance (formerly the Ministry of Strategy and Finance), National Tax Service, Korea Customs Service, and Public Procurement Service, which handle national economic/fiscal policy, budget/fund execution, taxation, government procurement, and various statistics. Because the work involves a broad range of corporate and stock-related matters, the committee determined that Chon had the potential to access corporate information or exercise influence.

“Suspicion of Improper Use of Information Undermines the Mandate”

Chon's side argued in court that it was excessive to broadly recognize the job-relatedness of all of his spouse's stocks simply because he was a member of the Finance and Economy Planning Committee. However, the court did not accept the plaintiff's argument that the stocks held by his spouse had no direct or substantial relation to his duties.

The court pointed out, “A high-ranking official deeply involved in fundamental national economic policy decisions and legislation, when trading stocks closely related to their duties, is bound to raise suspicions from the general public that they are using information obtained during their official duties for private stock trading.”

It emphasized, “Even if the official actually traded the stocks based on information collected through purely personal channels unrelated to their duties, it is almost impossible for the general public to distinguish this from the outside,” adding that “in cases of stock trading by high-ranking officials, the focus should not merely be on clawing back unfair profits, but on preventing conflicts of interest between stocks and duties in advance to protect the integrity of the mandate.”

“Stricter Standards for High-ranking Officials”… All Stocks Sold During Trial

The court ruled in favor of the Stock Blind Trust Review Committee, stating that even if the couple suffered disadvantages from being unable to manage or sell the stocks themselves, the public interest in establishing official ethics and ensuring impartiality in duties was significantly greater. The unique nature of the Finance and Economy Committee position held by Chon served as a key basis for the judgment.

The court ruled, “The information the plaintiff encounters in relation to his duties concerns the entire economy, is broad in scope and high in level, and there is a significant possibility of encountering high-level, non-public information,” noting that “the potential influence on stock prices is quite large and comprehensive.”

The court also viewed the possibility of stock trading using work-related information or the potential for stock price fluctuations due to the exercise of official influence as not just a vague, theoretical concern, but a matter with sufficient room to materialize in reality.

Arguments claiming that the direct and specific connection between individual stocks and duties was not substantively reviewed were also rejected. The court explained, “As a high-ranking official with broader and greater duties and powers, it could actually lead to the result that job-relatedness of individual stocks is denied, which would defeat the purpose of the blind trust system.”

However, it was confirmed that Chon had already sold all of the controversial stocks during the administrative litigation to resolve concerns about conflicts of interest. Chon's side stated, “We filed the lawsuit to seek a legal judgment on the Review Committee’s decision, but all stocks were disposed of during the trial process.”

According to the Public Service Ethics Act, high-ranking officials, including those subject to asset disclosure, must sell or place stocks in a blind trust within two months if the stocks held by them or their spouses exceed 30 million won. However, they are exempt from this obligation if they receive a decision from the Stock Blind Trust Review Committee that there is no job-relatedness.

Meanwhile, Chon suffered two losses in administrative lawsuits in one day, following a defeat in the 'October 15 Real Estate Measures' cancellation lawsuit that was also ruled on the same day.