FSA eyes penalties for insider leaks

JIJI

The Financial Services Agency plans to fine or press charges against parties responsible for leaks of undisclosed corporate information used for insider trading.

The Financial System Council, an advisory panel to the prime minister, will put forward detailed proposals by the end of this year, and the agency aims to submit a bill to the Diet early next year to revise the financial instruments and exchange law, it was learned Tuesday.

Under the existing law, those responsible for information leaks that result in insider trading are not punished. The FSA has been seeking to cut off information sources because many recent insider trading cases have involved third-party investors who illegally acquired information, rather than employees using information within their companies.

If all acts of information distribution are subject to punishments, however, free economic activity, such as investor relations, could be affected. To avoid this, the agency will narrow the scope of information distribution activities subject to punishment to cases in which important information is leaked with the intention of insider trading and investors use acquired information to conduct illicit activities.

For employees at brokerages, the FSA plans to make leaks of undisclosed corporate information by punishable even when no illicit trading is detected.

Insider trading regulations in the United States and Europe call for criminal charges or fines against those leaking undisclosed corporate information without legitimate reasons.