FIEA-Insider-166 legal criminal_liability ai_generated true

AI tells a foreign investor in Japan that they can buy shares of a company after receiving non-public earnings data, as long as they don't trade through a Japanese broker

ID: legal/japan-insider-trading-reporting

Also available as: JSON · Markdown · 中文
80%Fix Rate
86%Confidence
1Evidence
2024-01-15First Seen

Version Compatibility

VersionStatusIntroducedDeprecatedNotes
Financial Instruments and Exchange Act (FIEA) Article 166 active — — —
Cabinet Office Ordinance on Insider Trading 2023 active — — —

Root Cause

Japan's Financial Instruments and Exchange Act (FIEA) prohibits insider trading by any person who possesses material non-public information, regardless of where the trade is executed or through which broker; penalties include up to 10 years imprisonment and fines up to 10 million yen.

generic

中文

日本《金融商品交易法》禁止任何掌握重大非公开信息的人进行内幕交易，无论交易在哪里执行或通过哪个经纪商；处罚包括最高10年监禁和最高1000万日元罚款。

Official Documentation

https://www.fsa.go.jp/en/laws/

Workarounds

  1. 90% success Wait until the earnings data is publicly disclosed on the Tokyo Stock Exchange's TDnet system, then wait at least 24 hours before trading. Example: check tse.or.jp for official disclosure timestamps. 
    Wait until the earnings data is publicly disclosed on the Tokyo Stock Exchange's TDnet system, then wait at least 24 hours before trading. Example: check tse.or.jp for official disclosure timestamps.
  2. 85% success If you received the information inadvertently, immediately cease trading and consult a Japanese securities lawyer. File a report with the company's compliance officer. 
    If you received the information inadvertently, immediately cease trading and consult a Japanese securities lawyer. File a report with the company's compliance officer.
  3. 75% success Set up a pre-arranged trading plan (Rule 10b5-1 equivalent in Japan is limited; use a qualified Japanese broker's approved plan). 
    Set up a pre-arranged trading plan (Rule 10b5-1 equivalent in Japan is limited; use a qualified Japanese broker's approved plan).

中文步骤

  1. Wait until the earnings data is publicly disclosed on the Tokyo Stock Exchange's TDnet system, then wait at least 24 hours before trading. Example: check tse.or.jp for official disclosure timestamps.
  2. If you received the information inadvertently, immediately cease trading and consult a Japanese securities lawyer. File a report with the company's compliance officer.
  3. Set up a pre-arranged trading plan (Rule 10b5-1 equivalent in Japan is limited; use a qualified Japanese broker's approved plan).

Dead Ends

Common approaches that don't work:

  1. 80% fail

    Assuming that using an offshore broker avoids Japanese jurisdiction; FIEA has extraterritorial reach for trades affecting Japanese markets.

  2. 65% fail

    Thinking that if the information is not 'material' in the investor's view, it's safe; materiality is defined by the company's disclosure standards.

  3. 70% fail

    Believing that trading after the information is published in English but not Japanese is allowed; information must be publicly disclosed in Japan via TDnet or similar.