KIKOs are OTC currency option derivatives actively sold after 2007 in Korea. The loss of KIKO buyers was focused again by the public in November 2010, when the Seoul Central District Court decided 118 decisions on KIKO cases. Unfortunately, among the 118 cases, 99 plaintiffs lost in the first instance court. It was shocked to the plaintiffs since they were small and medium size corporations which, as they asserted, did not have enough knowledge and skill to understand and analyze the underlying risk of the KIKO financial derivatives. To decide the legal liability on KIKO derivatives, the characteristics of the structured financial derivatives must be considered. The designers and sellers of the derivatives have sufficient knowledge and skill to understand the inherent risk. However, the buyers are usually do not have such skill. Between seller and buyer, there is information asymmetry. In this article, I reviewed five cases related to OTC derivatives investment loss, including two Korean offshore funds` cases litigated in the U.S. (Diamond Fund case and Morning Glory Fund case), two U.S. cases (BT Securities(Gibson) case and P&G case), and one recent German Supreme Court case in March 2011. From the cases reviewed, I suggest some implications to consider to decide KIKO cases in higher courts in Korea. My suggestions are especially related to the fraud, misrepresentation, duty to explain, and suitability duty. First, since the buyer usually relies on the information and analysis provided by the seller to decide the purchase of the financial derivatives, the seller must clearly prove that the buyer has enough independent competence and skill to evaluate the relevant risk of the derivatives, if the seller asserts that the buyer decided independently or there was no reliance on the seller`s explanation on the risk. When there is information asymmetry between the parties of derivatives, it is usual for buyer to rely on the seller. It is exceptional that buyer does not rely on the seller when derivatives are purchased. Thus seller must prove for the exceptional circumstance. Second, the seller of derivatives has the duty to inform to the buyer on the value of the derivatives they sell. If the seller misinformed or omitted material information needed to decide the value, it can be a fraud or misrepresentation. Such duty can be an implied contactual obligation, even though it is not explicitly mentioned on the derivatives contract. Third, regarding the duty to explain and suitability duty, it is not enough for seller to explain theoretically the contents of the derivatives contract. The purpose of explanation and suitability is to make the buyer to understand the risk and product. To implement the principle of self decision to the buyer, it needs for buyer to have the same level of understanding on risk through the explanation of the seller. The seller must consider whether there is a gap of understanding to the buyer when the seller gives material information to the buyer or explain materiel factors on the risk. Such active duty to explain or suitability duty is based on the good faith and fair dealing. If the seller did not achieved such level of the buyer`s understanding by his explanation of the derivatives, it can be the breach of duty to explain or suitability duty.