JAPAN Law and Practice Contributed by: Shinya Tago, Atsushi Fukasawa, Hiroshi Iida and Landry Guesdon, Iwata Godo Law Offices
3.4 Insider Dealing, Market Abuse and Criminal Banking Law Insider Trading The FIEA prohibits: • insider trading (Articles 166 and 167); • unfair trading (Article 157); • spreading rumours, using fraudulent means and committing assault or intimidation (Article 158); and • market manipulation (collectively referred to as “market abuse”) (Article 159). Regulatory Authorities and Guidelines The regulatory and supervisory authorities relevant to insider trading and market abuse are the FSA and the SESC (see 2.1 White-Collar Enforcement Authori- ties ), which periodically issue and update FIEA-related guidelines. Self-regulatory organisations – such as the Japan Exchange Regulation (JPX), the Japan Securi - ties Dealers Association (JSDA) and the Japan Invest - ment Advisers Association (JIAA) – publish self-regu - latory guidelines for the prevention of insider trading. Offences Insider trading offences under the FIEA include the following. Insider trading by a “Corporate Insider” (Article 166) A “Corporate Insider” who has come to know of a “Material Fact” pertaining to the business or other matters of a listed company or a listed investment company (each a “Listed Company”), or of a subsidi - ary of a listed company or an asset management com - pany of a listed investment company, and who makes a sale, purchase or other transfer for value or agrees to a transfer for value of shares of the Listed Com- pany before the Material Fact is publicised, violates
and those who have provided, offered or promised to give such benefits will be punished. The CA also makes bribery or the provision or request of benefits regarding the exercise of shareholders’ rights a crime. Specific laws regulate the provision of advantages or benefits between private parties. For example, the FIEA generally prohibits Financial Instruments and Exchange Business Operators (FIEBOs), such as securities companies and banks, from providing property benefits to clients to make up for losses in securities or derivatives transactions. The Cabinet Office Ordinance on financial instru - ments and exchange business restricts FIEBOs and their officers or employees from providing a special advantage to clients. The Ordinance also restricts the staff of registered credit-rating agencies (CRAs) from receiving, demanding or accepting an offer of money or goods that exceeds JPY3,000 per case from their clients in general. No criminal punishment sanctions these acts, but FIEBOs or CRAs may be subject to administrative action by the regulator. 3.3 Anti-Bribery Regulation No statute imposes a specific obligation to prevent bribery and influence peddling, and there is no obliga - tion to maintain a compliance programme to prevent bribery. However, the CA requires the directors of a company to establish internal control systems, includ - ing a system to prevent unlawful conduct. Failure to do so constitutes a breach of a director’s duty of care. There is no systematic market practice in combat - ting corruption and corporate crime. However, most, if not all, listed companies in Japan have established or strengthened their internal control systems and com - pliance procedures by, for example: • rolling out in-house education and training courses; • strengthening internal audit rules; • increasing audit frequency; and • setting up credible whistle-blowing systems and hotlines.
the FIEA insider trading rules. “Corporate Insiders” include:
• officers, agents, employees or other workers (“Officers”) of the Listed Company (including its parent company and subsidiaries, as well as asset management companies or specified associated companies of a listed investment company) who
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