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Yomiuri Shimbun file photo The Tokyo Stock Exchange in Chuo Ward, Tokyo, in July
The Yomiuri Shimbun
17:21 JST, October 24, 2024
A relative of a Tokyo Stock Exchange official under investigation for suspected insider trading is believed to have made a profit of at least several hundred thousand yen by trading stocks, according to sources.
The TSE employee is suspected of providing his relative with undisclosed corporate information about takeover bids and recommending that the relative trade stocks based on the information, they said.
The Securities and Exchange Surveillance Commission (SESC) is investigating the employee’s communications with the relative and the relative’s trading details with a view to file a complaint with the Tokyo District Public Prosecutors Office’s special investigation squad.
The employee who allegedly leaked the information is a man in his 20s who works in the Corporate Disclosure Office of the TSE, according to the sources.
The office is in charge of “timely disclosure” — a company’s practice of providing investors with important corporate information that may affect the management of the company. The employee is suspected of having recommended that his relative trade the stocks of certain companies based on nonpublic information about tender offers he obtained through his work.
When a tender offer is officially announced, the stock price of the target company often fluctuates. The relative in question allegedly made several stock trades based on the employee’s recommendations, making a total profit of at least several hundred thousand yen in the process.
Insider trading, where a person trades shares with knowledge of undisclosed important facts, is regulated under the Financial Instruments and Exchange Law. It is also considered insider trading if a person discloses such facts to others or recommends trades even without disclosing the facts to others.
The SESC conducted an investigation of the employee and his relative in September, and the TSE removed the employee from duties that involved handling undisclosed information.
“We will fully cooperate on the investigation. We sincerely apologize for the inconvenience and concern this may have caused related parties,” the Japan Exchange Group, which owns the TSE, said in a statement on Wednesday.
It was also found on Saturday that a judge temporarily assigned to the Financial Services Agency had been under investigation on suspicion of insider trading based on undisclosed corporate information, such as a takeover bid, obtained in the course of his duties.
“It is very regrettable that officials from the FSA and the TSE, who are in charge of market supervision, have been under investigation by the SESC,” Deputy Chief Cabinet Secretary Kazuhiko Aoki said during a press conference on Wednesday. “It is necessary to make every effort to ensure the credibility of the financial market, such as by thoroughly implementing measures to prevent a reoccurrence, based on the results of the investigation.”
