Japan’s securities industry moves to tackle material information leaks

Wed Jul 20, 2016 8:02am EDT
 
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By Thomas Wilson and Emi Emoto

TOKYO (Reuters) - Japan's securities industry body will tackle leaks of unpublished corporate information with a new set of guidelines, it said on Wednesday, a move that comes as the country grapples with how to ensure fair access to market-sensitive information.

Under the Japan Securities Dealers Association's (JSDA) guidelines, analysts at brokerages will be banned from gathering information that could reveal earnings results. Brokerages will also have to vet data gathered by analysts and ensure undisclosed material information isn't passed to clients.

But new punishments will not be brought in for breaking the guidelines, which could come into effect as early as October. Violations will instead be dealt with under existing rules on the treatment of material information.

At present, individuals who break the rules can be sacked or disbarred from the industry, while brokerages can be fined or slapped with punishments such as business improvement orders, the JSDA said.

Investors' access to non-public material information, such as earnings results, has come into focus in Japan in recent months.

The country's financial regulator censured local securities units of Deutsche Bank and Credit Suisse Group AG in December and April respectively for leaking earnings information to clients.

But Japan, the world's third-largest economy, lacks rules on so-called fair disclosure. In the United States, financial regulators brought in regulations to tackle selective disclosure of information by public companies in 2000.

The Financial Services Agency is considering bringing in fair disclosure rules - a possibility welcomed by corporate governance experts, despite a lack of clarity on when, and in what form, such rules could be introduced.   Continued...

 
A man looks at an electronic board showing Japan's Nikkei average and related indices at the Tokyo Stock Exchange (TSE) in Tokyo August 26, 2015.  REUTERS/Yuya Shino