December 2, 2013
Securities and Exchange Surveillance Commission
The Securities and Exchange Surveillance Commission (“SESC”), today, made a recommendation to the Prime Minister and the Commissioner of the Financial Services Agency that an administrative monetary penalty payment order be issued in regard to an insider trading by Finnowave Investments, Inc. (“FWI”) pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency. This recommendation is based on the findings of the investigation into the insider trading, whereby the following violations of laws and ordinances were identified.
FWI was empowered to manage the fund assets of a Cayman domiciled company investment trust, HADOH Fund Ltd., based on the discretionary investment management agreement which FWI had entered into.
By July 2, 2010, at the latest, FWI through its officer who was in charge of the investment management of the said assets as fund manager, was tipped by an employee A of a securities company the material information that the executive decision-making body of INPEX Corporation (“INPEX”) made a decision to launch a follow-on public offering of its shares, which at first another employee B of the said securities company had learnt through the negotiation of the underwriting agreement and which later the said employee A had learnt in the course of his duties. Having been tipped as such, from July 7 to July 8, 2010, prior to the publication of the said material information on July 8, 2010, the said officer sold the shares of INPEX as the investment management based on the discretionary investment management agreement mentioned above. Accordingly, on the account of the said fund, FWI sold a total of 500 shares of INPEX for 239,499,500 yen.
It was concluded that the conduct of FWI mentioned above constituted “a person has conducted Sales and Purchase, etc. set forth in Article 166(1) in violation of the provisions of Article 166(1) or (3)” as stipulated under Article 175(1) of the Financial Instruments and Exchange Act before the amendments by the Act No.86 of 2012 (“FIEA”).
Pursuant to the FIEA, the amount of the administrative monetary penalty applicable to the above violation is 170,000 yen.
Details of the calculation are presented in the Attachment.
It had been reported to the SESC by the securities company mentioned in Section 2 above that this case was found in the course of its voluntary examination. The securities company has thereafter continued to cooperate with the SESC in its investigation.
(1) Pursuant to Article 175(1)(iii) of the FIEA and Article 1-21(1)(i) of the Cabinet Office Ordinance on Administrative Monetary Penalty Provided for in Chapter VI-II of the FIEA, a person who has, for the purpose of investing assets under management, engaged in transactions (“Violator") specified under Article 175(1)(iii) of the FIEA may be ordered to pay an administrative monetary penalty in the amount calculated as follows: (a) The total amount of money or other property paid or payable to the Violator as remuneration for the investment of the assets under management for the month in which the said transactions were executed (b) is multiplied by the highest value reached by the total amount of the issue included in the assets under management that was transacted during the period between the day on which the said transactions were executed and the last day of the month in which the said transactions were executed and (c) is then divided by the total value of the assets under management as of the last day of the month in which the said transactions were executed.
(a) 46,929,039 yen × (b) 147,600,000 yen ÷ (c) 38,529,995,214 yen
= 179,774 yen
(2) Pursuant to the provisions of Article 176(2) of the FIEA, the fraction less than ten thousand yen contained in (1) above shall be rounded down.
* Last Updated: December 16, 2013