SESC Latest Topics No.74＜June 2021＞

Filing criminal charges of committing market manipulation of the shares of NICHIDAI CORPORATION.

＜Summary＞

The SESC filed criminal charges against two suspects with the Osaka District Public Prosecutors Office for violation of the Financial Instruments and Exchange Act (hereinafter, “FIEA”) (Stabilizing transaction).

For the purpose of stabilizing the share price, the criminal suspect (hereinafter, “suspect”) A and B, in conspiracy, had been conducting a series of sales and purchases, and entrustments of the shares of NICHIDAI CORPORATION listed on the securities market established by the Tokyo Stock Exchange, Inc. in an attempt to keep the share price 3,050 yen or less, a level at which the measures to raise the security deposit ratio for margin transactions etc. were removed.

Specifically, from around 2:55 p.m. to around 3:00 p.m. on March 9, 2018, suspect A and B (i) sold a total of 195,700 shares under the name of suspect A via two securities firms in order to curb the price rise by way of placing a large number of limit sell orders at the price of 3,045 yen etc. on the market and (ii) entrusted the sale of a total of 186,900 shares under the name of suspect A and others via three securities firms, thereby stabilizing the share price between 3,050 yen and 3,035 yen in violation of the provisions of the Order for Enforcement of the FIEA.

For the purpose of stabilizing the share price, suspect A had been conducting a series of sales and purchases, and entrustments of the shares in an attempt to keep the share price 3,820 yen or less, a level at which the measures to raise the security deposit ratio for margin transactions were avoided.

Specifically, from around 2:58 pm to around 3:00 pm on March 16, 2018, suspect A (i) sold a total of 84,400 shares under the name of suspect A via two securities firms in order to curb the price rise by placing a large number of limit sell orders at the price of 3,815 yen etc. on the market and (ii) entrusted the sale of a total of 47,600 shares under the name of suspect A via a securities firm, thereby stabilizing the share price between 3,820 yen and 3,810 yen in violation of the provisions of the Order for Enforcement of the FIEA.

Recommendation for administrative monetary penalty payment order against J-Holdings Corp. for making false statements in its disclosure documents.

＜Summary＞

The SESC recommended that the Prime Minister and the Commissioner of the FSA impose an administrative penalty order of 18,000,000 yen against J-Holdings Corp. (hereinafter, “the Corporation”).

Through an inspection of the Corporation’s disclosure statements, the SESC confirmed that the Corporation disclosed false statements in its Annual Securities Report that included an excessive amount of net income due to improper accounting practices by the consolidated subsidiary.

Recommendation for administrative monetary penalty payment order against FUJISOFT SERVICE BUREAU INCORPORATED for making false statements in its disclosure documents.

＜Summary＞

The SESC recommended that the Prime Minister and the Commissioner of the FSA impose an administrative penalty order of 12,000,000 yen against FUJISOFT SERVICE BUREAU INCORPORATED (hereinafter, “the Company”).

Through an inspection of the Company’s disclosure statements, the SESC confirmed that the Company disclosed false statements in its Annual Securities Report due to the overstating the sales in the contracted business.

Recommendation for administrative monetary penalty payment order against UMC Electronics Co., Ltd. for making false statements in its disclosure documents.

＜Summary＞

The SESC recommended that the Prime Minister and the Commissioner of the FSA impose an administrative penalty order of 396,150,000 yen against UMC Electronics Co., Ltd. (hereinafter, “the Company”).

Through an inspection of the Company’s disclosure statements, the SESC confirmed that the Company disclosed false statements in its Annual Securities Report that included an excessive amount of net income due to improper accounting practices by the consolidated subsidiaries in China.

The inspection also found that the Company made public offerings of its securities by submitting its Securities Registration Statement which also disclosed false information on significant matters.

Recommendation for administrative monetary penalty payment order against AEON DELIGHT CO.,LTD. for making false statements in its disclosure documents.

＜Summary＞

The SESC recommended that the Prime Minister and the Commissioner of the FSA impose an administrative penalty order of 35,650,000 yen against AEON DELIGHT CO., LTD. (hereinafter, “the Company”).

Through an inspection of the Company’s disclosure statements, the SESC confirmed that the Company disclosed false statements in its Annual Securities Report by the consolidated subsidiary’s overstating the sales from fictitious transactions, and understating the costs of sales.

Recommendation for administrative monetary penalty payment order against Japan Display Inc. for making false statements in its disclosure documents.

＜Summary＞

The SESC recommended that the Prime Minister and the Commissioner of the FSA impose an administrative penalty order of 2,163,334,996 yen against Japan Display Inc. (hereinafter, “the Company”).

Through an inspection of the Company’s disclosure statements, the SESC confirmed that the Company disclosed false statements in its Annual Securities Report by understating the costs of sales due to the recording of fictitious year-end inventories, understating the costs of sales due to unrealized losses on unsold inventories, recording sales that did not meet the revenue recognition standard and overstating fixed assets.

The inspection also found that the Company made public offerings of its securities by submitting its Securities Registration Statement which also disclosed false information on significant matters.