INVESTMENT BANKING | Staff Reporter, Japan

Tougher insider trading laws being considered in Japan

An embarrassing insider trading scandal compels the government to take a tougher stand against this illegal but commonplace practice in Japan.

Financial Services Minister Tadahiro Matsushita said Tokyo may impose stricter insider trading laws because of the expanding criminal probe into the practice.

Matsushita said the government wants to consider necessary measures after reviewing and sorting out recurring and similar insider trading cases.

His comments came immediately after the arrest of former SMBC Nikko Securities executive Hiroyoshi Yoshioka and three others on alleged insider trading. Yoshioka is the first banker from a major Japanese brokerage to be detained for suspected insider trading since 2008. He allegedly made US$25,000 from the illegal trades.

Yoshioka, however, denied that he was involved in insider trading while employed at SMBC Nikko, a unit of Sumitomo Mitsui Financial Group Inc., Japan’s second-largest bank by market value.

Matsushita said Japan’s financial sector regulator, the Financial Services Agency, would take tough action that could include fines on SMBC Nikko, which is one of Japan's biggest asset managers.

The fine for insider trading in Japan is a paltry US$1,500 and criminal convictions are rare. The SMBC Nikko scandal, however, has renewed pressure on the government to get tougher on lax regulations and close legal loopholes that have tarnished Japan's corporate governance image.


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