Responding to a number of cases in which investors are thought to have surreptitiously obtained confidential financial information before its official release, Tokyo Stock Exchange Inc. has urged listed companies to enhance their Internet security to safeguard their data, market sources said Thursday.
In one case, a man in Hyogo Prefecture who was thought to have profited from undisclosed earnings statements was investigated by the Securities and Exchange Surveillance Commission, which decided not to pursue an insider trading case against him because he had not received the information from company officials.
The law prohibits investors from trading on information that has been provided by company officials.
The commission is thus calling on listed firms to be careful about the handling of important information, instead of filing a criminal complaint.
The affected companies included a textile company listed on the first section of the TSE.
The companies had released earnings and other data on the TSE’s Timely Disclosure Network (TDnet) and on their own websites at the same time.
To post the data on their websites, the firms transferred files kept in private directories on Web servers, where access is restricted, to accessible directories, for automatic simultaneous release, the sources said.
But investors, including the Hyogo man, are believed to have used software that detects new data that have been moved into accessible directories in order to obtain the files, and profited from subsequent stock trades, the sources said.
In response, the exchange provided some 2,000 publicly traded companies with guidelines for posting key information on their websites last October.
It later sent out questionnaires to see if the companies had taken steps to keep information from leaking through the Internet. The TSE also renewed the warning to tighten online security to its listed members earlier this week.