Japan to Narrow Scope of Insider Trading Ban

Tokyo, Oct. 1 (Jiji Press)--Japan plans to narrow the scope of its ban on insider stock trading by excluding a minor form of corporate action, officials told Jiji Press on Wednesday.

The review follows a controversial case in which construction
machinery maker Komatsu Ltd. <6301> was fined for buying back shares before
announcing a plan to liquidate a Dutch unit that was not operating.
The Financial Services Agency plans to remove liquidations of minor
subsidiaries from the list of important corporate steps subject to insider
trading regulations.
If a listed company liquidates a minor subsidiary, the move will
not be considered an important action unless it causes a fall of at least 30
pct in the parent's net assets and a drop of at least 10 pct in the parent's
sales.
The Financial Instruments and Exchange Law sets criteria for
determining corporate mergers and spin-offs that are considered to have only
a minor impact on investment decisions by general investors and thus are not
subject to insider trading regulations.
But there are no such criteria to cover liquidations of
subsidiaries.
The FSA has already started asking for public comments on the
deregulation which it plans to implement later this year.
Komatsu was last year fined 43.78 million yen, the largest penalty
handed out in an insider trading case in Japan.
The company agreed to pay the fines while claiming that the
liquidation of the Dutch unit was not an important action subject to insider
trading rules because the unit was effectively defunct.