The Tokyo District Court has sentenced a former judge to 2 years imprisonment, suspended for 4 years, over insider trading charges. The former judge pleaded guilty to engaging in the illicit activity while on temporary assignment at Japan’s Financial Services Agency (FSA).
In Japan, young judges are assigned to administrative agencies as a way to enhance their experience across multiple fields.
In April 2024, the former judge was assigned to the FSA which oversees banking, securities and exchange, and insurance sectors to uphold the stability of the country’s financial system. During his time at the FSA, he screened documents containing firms’ planned tender offer periods and prices.
According to the presiding judge, the perpetrator “damaged the fairness and soundness of the market as well as the trust of investors”.
The former judge bought shares in 10 companies for ¥9.52 million in total during the period in question while in possession of undisclosed information about tender offers.
When questioned about his motive, the perpetrator told the court, “I was strongly obsessed with the thought that I had to prepare in case something happened to my aging parents and my family.”
In addition to prison time and suspension penalties, the court imposed a fine of ¥1 million ($6,670) and an additional penalty of ¥10.2 million for his unlawful use of market-sensitive information for personal gain.
The former judge said in court, “I strongly regret that I betrayed the trust of people at the FSA and the court. I will atone for it all my life.”
The Role of RegTech in Reducing Insider Trading Risk
Financial regulators expect firms to keep detailed records of individuals with access to material non-public information (MNPI). An “insider list” register should include internal employees as well as external parties such as consultants, auditors, and advisors who may encounter MNPI during the course of business dealings.
These lists must include clear, up-to-date information such as contact details, reasons for inclusion, and time-stamped entries reflecting when individuals were added or removed. Maintaining an audit trail of these changes is vital to demonstrate proper record-keeping to regulators.
Given the operational demands of maintaining insider lists, relying on manual spreadsheets or basic documentation tools can dramatically increase the likelihood of errors. However, financial firms are increasingly adopting RegTech solutions to manage MNPI and insider lists more effectively. Platforms like MyComplianceOffice (MCO) offer streamlined capabilities for insider list management, improving oversight, reducing administrative burdens, and ensuring regulatory compliance.
MCO’s Know Your Transactions (KYT) suite offers key capabilities to support firms in meeting their compliance obligations, including centralised MNPI tracking to electronically maintain insider lists, log access to confidential information, manage wall-crossings, and track key events. MCO’s Insider & MNPI Management includes streamlined management of persons with temporary access to sensitive information based on deals, corporate events, and publication of financial statements or profit warnings.
Learn More About Managing Trading Risk
Insider trading risk extends far beyond traditional misconduct. MCO’s in-depth article highlights how employees can exploit MNPI through increasingly complex schemes that can even stretch across firms and markets. Discover why modern surveillance tools are essential for compliance teams aiming to detect, prevent, and respond to trading risks.
See MCO’s article, Managing Insider Information is the Key to Managing Trading Risk.
