# 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`
- **Domain:** legal
- **Category:** criminal_liability
- **Error Code:** `FIEA-Insider-166`
- **Verification:** ai_generated
- **Fix Rate:** 80%

## 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.

## Version Compatibility

| Version | Status | Introduced | Deprecated |
|---------|--------|------------|------------|
| Financial Instruments and Exchange Act (FIEA) Article 166 | active | — | — |
| Cabinet Office Ordinance on Insider Trading 2023 | active | — | — |

## Workarounds

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.** (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.
   ```
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.** (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.
   ```
3. **Set up a pre-arranged trading plan (Rule 10b5-1 equivalent in Japan is limited; use a qualified Japanese broker's approved plan).** (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).
   ```

## Dead Ends

- **** — Assuming that using an offshore broker avoids Japanese jurisdiction; FIEA has extraterritorial reach for trades affecting Japanese markets. (80% 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. (65% 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. (70% fail)