SESC Latest Topics No.82<June 2022>

Last Updated : June 27, 2022

What’s New on the SESC Website

This page contains the latest in events, developments, and updates to the SESC website.

Press Releases

(Following press release is available in Japanese)

 

Market Misconduct

February 14, 2022:

Filing criminal charges for committing insider trading of the shares of ASAHI EITO CO., LTD.open new window

<Summary>

The SESC filed criminal charges against two suspected companies and two suspects with the Osaka District Public Prosecutors Office for violations of the Financial Instruments and Exchange Act (hereinafter “FIEA”) (insider trading).
 
Suspect A was a Representative Director and President of ASAHI EITO CO., LTD. (hereinafter “ASAHI EITO”), the shares of which were listed on the securities market of the Tokyo Stock Exchange (hereinafter “TSE”), and around late July 2017, came to know in the course of his/her duty a material fact to the effect that ASAHI EITO had decided to enter into a business alliance with YAMADA DENKI Co., Ltd. (it changed its name to YAMADA HOLDINGS CO., LTD. on October 1, 2020). One of the two suspected companies, Uenaka Shouji Kabushiki Kaisha (hereinafter “Uenaka Shouji”), has engaged in investment business, etc.; the other, Horizon Kabushiki Kaisha (hereinafter “Horizon”), has engaged in investing in securities, etc. Suspect B is a Representative Director of Uenaka Shouji, as well as substantially managing Horizon.
 
I  Suspect A and B, in conspiracy, purchased a total of 50,000 shares of ASAHI EITO for a total of approximately 5.8 million yen on the TSE under the name of Kabushiki Kaisha Succeed (hereinafter “Succeed”) via a securities firm between around early August 2017 and around the end of that month (prior to the announcement of the material fact) despite there being no applicable exemption clause under the FIEA.
 
II  Suspect B was informed of the material fact by Suspect A around early August 2017. Despite there being no applicable exemption clause under the FIEA, Suspect B purchased (i) a total of 260,000 shares of ASAHI EITO for a total of approximately 33.8 million yen on the TSE under the name of Horizon via a securities firm between around early August and around mid-October 2017 (prior to the announcement of the material fact) with regard to the businesses and the properties of Horizon, (ii) a total of approximately 180,000 shares of ASAHI EITO for a total of approximately 24.3 million yen on the TSE under the name of Succeed via a securities firm between around mid-August and around early November 2017 (prior to the announcement of the material fact) with regard to the businesses and the properties of Uenaka Shouji, and (iii) a total of approximately 200,000 shares of ASAHI EITO for a total of approximately 28.7 million yen on the TSE under his/her own name and one other name via securities firms between around early August and around late October 2017 (prior to the announcement of the material fact).

February 24, 2022:

Filing criminal charges for committing insider trading of the shares of tella, Inc. (1)open new window

<Summary>

The SESC filed a criminal charge against a suspect with the Tokyo District Public Prosecutors Office for violations of the Financial Instruments and Exchange Act (hereinafter “FIEA”) (insider trading).
 
Around mid-April 2020, suspect A was informed by an executive director of Cenegenics Japan Inc. (hereinafter "Cene Japan") of a material fact to the effect that tella Inc. (hereinafter "tella"), the shares of which were listed on the securities market of the Tokyo Stock Exchange, had decided to enter into a business alliance with Cene Japan, which had been negotiating a business alliance agreement with tella for joint research on the development of a mesenchymal stem cell-based therapy for pneumonia caused by Coronavirus disease (COVID-19), after that executive director came to know the material fact in the course of the negotiation for the agreement. Around mid-April 2020 (prior to the announcement of the material fact), suspect A purchased a total of 6,500 shares of tella for a total of approximately 900,000 yen on the Tokyo Stock Exchange and a private trading system under his/her own name via a securities firm, despite there being no applicable exemption clause under the FIEA.

February 24, 2022:

Filing criminal charges for committing insider trading of the shares of tella, Inc. (2)open new window

<Summary>

The SESC filed a criminal charge against a suspect with the Tokyo District Public Prosecutors Office for violations of the Financial Instruments and Exchange Act (hereinafter, “FIEA”) (insider trading).
 
Around late April 2020, suspect A was informed by an executive director of Cenegenics Japan Inc. (hereinafter "Cene Japan") of a material fact to the effect that tella Inc. (hereinafter "tella"), the shares of which were listed on the securities market of the Tokyo Stock Exchange, had decided to enter into a business alliance with Cene Japan, which had been negotiating a business alliance agreement with tella for joint research on the development of a mesenchymal stem cell-based therapy for pneumonia caused by Coronavirus disease (COVID-19), after that executive director came to know the material fact in the course of the negotiation for the agreement. Around late April 2020 (prior to the announcement of the material fact), suspect A purchased a total of 150,000 shares of tella for a total of approximately 22.3 million yen on the Tokyo Stock Exchange under his/her own name and one other name via a securities firm, despite there being no exemption clause applicable under the FIEA. 

February 24, 2022:

Filing criminal charges for committing insider trading of the shares of tella, Inc. (3)open new window

<Summary>

The SESC filed criminal charges against a suspected company and a suspect with the Tokyo District Public Prosecutors Office for violations of the Financial Instruments and Exchange Act (hereinafter “FIEA”) (insider trading).
 
The suspected company, Uchida Kensetsu Kabushiki Kaisha, has engaged in the sale, purchase, brokerage, management, and leasing of real estate. Suspect A is a representative director of the suspected company. Cenegenics Japan Inc. (hereinafter "Cene Japan") is a company which had entered into a business alliance agreement with tella Inc. (hereinafter "tella"), the shares of which were listed on the securities market of the Tokyo Stock Exchange, for joint research on the development of a mesenchymal stem cell-based therapy for pneumonia caused by Coronavirus disease (COVID-19). Around late May 2020, suspect A was informed by an executive director of Cene Japan of a material fact which concerns the operations, business, or assets of tella and has a significant influence on investors' investment decisions, such as that improvements in symptoms were observed in a clinical trial conducted under the agreement for the first patient, after that executive director came to know the material fact in the course of the execution of the agreement. Around late May 2020 (prior to the announcement of the material fact), with regard to the businesses and the properties of the suspected company, suspect A purchased a total of 20,000 shares of tella under the company’s own name on the Tokyo Stock Exchange via a securities firm for a total of approximately 17.4 million yen, despite there being no exemption clause applicable under the FIEA.

March 16, 2022:

Filing criminal charges for using fraudulent means in relation to the shares of tella, Inc.open new window

<Summary>

The SESC filed a criminal charge against a suspect with the Tokyo District Public Prosecutors Office for violations of the Financial Instruments and Exchange Act (hereinafter “FIEA”) (use of Fraudulent Means).
 
Suspect A was an executive director of Cenegenics Japan Inc. (hereinafter "Cene Japan"), a company to which tella Inc. (hereinafter "tella"), the shares of which were listed on the Tokyo Stock Exchange (hereinafter "TSE"), planned to allocate its new shares as a third-party allotment. With regard to capital increases through the third-party allotment, suspect A planned to boost the stock price of tella by having tella publicly announce a false fact that Cene Japan had secured the funds to pay for the capital increases, and then to acquire tella’s shares by using the funds raised by promising to transfer a portion of tella’s shares to be allotted or to offer them as collateral between the announcement date and the payment date. In connection with the announcement that the Board of Directors of tella had resolved to issue 5.85 million shares of common stock to Cene Japan at a total issue price of approximately 3.5 billion yen with a payment date of November 13, 2020, the truth is that the balance of a savings account in the name of Kabushiki Kaisha Toredo (hereinafter “Toredo”) was approximately 500,000 yen as of mid-September 2020 and its lawyer had not confirmed the original bank book of the savings account and that there was no concrete prospect that Cene Japan would be able to raise the funds required for the payment. However, suspect A claimed that the balance of the savings account was approximately 7.5 billion yen as of the same date, and that its lawyer had confirmed this with the original of the bank book, thereby pretending that there was a concrete prospect that Cene Japan could raise the funds necessary for the payment through the loan from Toredo. On October 28 2020, suspect A had the officers and employees of tella, who believed suspect A’s claims, make a public announcement through TDnet (Timely Disclosure Network operated by the TSE) containing false information to the effect that Cene Japan could raise funds through a loan from Toredo, and thereby used fraudulent means for the purpose of trading in securities and causing a fluctuation in the market price of a security. 

April 26, 2022:

Recommendation for an administrative monetary penalty payment order against market manipulation relating to shares of SPANCRETE CORPORATION.open new window

<Summary>

The SESC recommended that the Prime Minister and the Commissioner of the FSA issue an administrative monetary penalty payment order of 3,090,000 yen against an individual investor who committed market manipulation in violation of the Financial Instruments and Exchange Act.
 
Based on an inspection, the SESC determined that the individual investor had committed market manipulation for the purpose of inducing the sale and purchase of securities through (1) pulling up the share prices of SPANCRETE CORPORATION higher than the last commitment value by placing purchase orders at higher prices than the last commitment value, and (2) placing purchase orders against his/her own sell orders.
 
Through these techniques, the individual investor intended to mislead other persons into believing that the sale and purchase of the securities were thriving, and to cause fluctuations in market prices in his/her favor.

June 3, 2022:

Recommendation for an administrative monetary penalty payment order against an officer of a corporation engaged in negotiation to conclude a contract with a tender offeror, for committing insider trading related to shares of FamilyMart Co., Ltd.open new window

<Summary>

The SESC recommended that the Prime Minister and the Commissioner of the FSA issue an administrative monetary penalty payment order of 1,670,000 yen against an officer of a corporation engaged in negotiation to conclude a contract with a tender offeror.
 
Based on an inspection, the SESC determined that the officer had committed insider trading by purchasing shares of FamilyMart Co., Ltd., using insider information, in violation of the Financial Instruments and Exchange Act.

False Disclosure Statement

April 15, 2022:

Recommendation for an administrative monetary penalty payment order against MTG Co., Ltd. for making false statements in its Quarterly Report.open new window

<Summary>

The SESC made a recommendation that the Prime Minister and the Commissioner of the Financial Services Agency impose an administrative monetary penalty order of 3,660,000 yen against MTG Co., Ltd. (hereinafter, “the Company”). As a result of the inspection from a disclosure-regulation perspective, the SESC found that the Company had prepared consolidated financial statements that contained excessive quarterly net profits in its consolidated financial statement in accordance with improper accounting treatment and submitted a Quarterly Report including related reference information. The SESC accordingly decided that the Company had made a false statement in the continuing disclosure document.

April 26, 2022:

Recommendation for an administrative monetary penalty payment order against G Three Holdings CORPORATION for making false statements in its disclosure documents.open new window

<Summary>

The SESC made a recommendation that the Prime Minister and the Commissioner of the Financial Services Agency impose an administrative monetary penalty order of 4,6050,000 yen against G Three Holdings CORPORATION (hereinafter, “the Company”). As a result of the inspection from a disclosure-regulation perspective, the SESC found that the Company had prepared consolidated financial statements that contained excessive current net profits in accordance with improper accounting treatment and submitted Annual Securities Reports, Quarterly Reports, and a securities registration statement including the Annual Securities Reports and Quarterly Reports as embedded information. The SESC accordingly decided that the Company had made false statements in the disclosure documents.
Through an inspection of the Company’s disclosure statements, the SESC also found that the Company failed to disclose the Company’s transactions with a member of the Company’s board of directors in the Notes on “Transactions with Related Parties” in its consolidated financial statements and submitted another Annual Securities Report that omitted a statement as to a material particular to be disclosed.

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