Japan: Securities Regulators Invest in Technology to Battle Insider Trading

In Japan, enforcement of the insider trading laws have historically been quite lax.  That may be about to change, however, as Japan’s Securities and Exchange Surveillance Commission has invested in a new online information-gathering system named Compliance WAN which gives regulators direct access to the history of customer transactions at brokerages.  Compliance WAN replaces the prior practice that required employees of securities houses to “personally deliver data stored on floppy disks” whenever the regulator needed evidence. The Japan Times reports that the new network is also linked with domestic securities exchanges.

In the fiscal year that ended last June, 951 trades came under investigation by inspectors for possible insider trading. That was double the number from five years before, the Japan Times reports.  The inspectors refer their findings to the SESC’s Civil Penalties Investigation and Disclosure Documents Inspection Division or Investigation Division. The Investigation Division lodges a criminal complaint when necessary.

Regulators believe the new system will make their job easier. “If we put together all the bits and pieces of information, one clear picture of wrongdoing comes into relief,” said Kenji Goto, an official with the SESC Market Surveillance Division. “Even a transaction involving a small amount of money won’t escape our attention.”

Read the Japan Times article