Reiwa 5 (Wa) 1052 Financial Instruments and Exchange Act Violation

In early 2025, Takeshi Nakamura, a senior executive at a major Japanese securities firm, was indicted for violating the Financial Instruments and Exchange Act. The Tokyo District Public Prosecutors Office alleged that between November 2024 and January 2025, Nakamura used confidential information about an upcoming tender offer bid by a client company to purchase shares in the target firm through a relative’s account. He realized approximately ¥18 million in illicit profits. The Securities and Exchange Surveillance Commission uncovered the trading pattern through routine market surveillance and referred the case to prosecutors. Nakamura admitted to the allegations during trial, and the court focused on the breach of fiduciary duty and damage to market confidence. The case was tried under docket number Reiwa 5 (Wa) 1052 at the Tokyo District Court.

The Tokyo District Court sentenced Takeshi Nakamura to 18 months in prison, suspended for three years, and imposed a fine of ¥5 million, along with a confiscation order for the ¥18 million in illicit gains. No appeal was filed by either party.

Whether the information constituted material non-public facts as defined by the Financial Instruments and Exchange Act; whether the use of a relative’s account demonstrated intent to conceal the insider trading; and whether the penalty should consider the defendant’s cooperation with the investigation and the relatively small scale of profits compared to institutional cases.

The case reinforced the Financial Services Agency’s strict stance on market abuse, prompting several brokerages to tighten internal information barriers and compliance training. Retail investor groups cited it as a deterrent that helps restore trust in Tokyo’s equity markets. Media coverage focused on the personal accountability of senior executives, contributing to public debate on corporate governance reforms in Japan.