SESC Latest Topics No.97＜March 2024＞

Recommendation for an administrative monetary penalty payment order against ITbook Holdings Co., LTD. for making false statements in its disclosure documents.

<Summary>

The Securities and Exchange Surveillance Commission (SESC) made a recommendation that the Prime Minister and the Commissioner of the Financial Services Agency impose an administrative monetary penalty order of 109,290,000 yen against ITbook Holdings Co., LTD. (hereinafter “the Company”). As a result of an inspection from a disclosure-regulation perspective, the SESC found that the Company had prepared consolidated financial statements that contained an excessive amount of current net profit due to improper accounting treatment and submitted Annual Securities Reports and Quarterly Reports and a Securities Registration Statement containing such statements. The SESC accordingly decided that the Company had made false statements in the disclosure documents.

Filing a criminal charge of committing market manipulation of the shares of NICHIRYOKU Co., Ltd.

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The SESC filed a criminal charge against a suspect with the Osaka District Public Prosecutors Office for violation of the Financial Instruments and Exchange Act (market manipulation).
 
i. The suspect raised the price of the shares which NICHIRYOKU Co., Ltd. issued, listed on the securities market established by the Tokyo Stock Exchange, Inc., from 1,047 yen to 1,250 yen between October 26, 2020, and October 28, 2020 (hereinafter “period 1”), in an attempt to raise the price of the shares:
 
・For the purpose of inducing sales and purchases of the shares, the suspect purchased a total of 17,100 shares on the market over three trading days during the period 1 by means of placing a series of high limit orders and purchasing the shares at high prices under the name of A and another via a securities company in order to mislead others into believing that the sales and purchases of the shares were thriving, and also conducted a series of share trading to cause fluctuations in market prices in his/her favor.
・For the purpose of misleading others about the status of the sales and purchases of the shares, such as misleading others into believing that the sales and purchases of the shares were thriving, the suspect conducted fake sales and purchases of the shares without the transfer of right, by selling and purchasing for a total of 2,500 shares on the market under the name of B and three others via two securities companies at the same time over two trading days during the period 1.
 
ii. The suspect raised the price of the shares from 942 yen to 1,300 yen between November 16, 2020, and December 7, 2020 (hereinafter “period 2”), in an attempt to raise the price of the shares:
 
・For the purpose of inducing sales and purchases of the shares, the suspect purchased a total of 112,100 shares on the market over15 trading days during the period 2 by means of placing a series of high limit orders and purchasing the shares at high prices under the name of C and three others via three securities companies, and entrusted the purchase of a total of 2,300 shares over three trading days during the period 2 in the same way as above under the name of D and another via two securities companies in order to mislead others into believing that the sales and purchases of the shares were thriving, and also conducted a series of share trading and entrusted the trading to cause fluctuations in market prices in his/her favor.
・For the purpose of misleading others about the status of the sales and purchases of the shares, such as misleading others into believing that the sales and purchases of the shares were thriving, the suspect conducted fake sales and purchases of the shares without the transfer of right, by selling and purchasing for a total of 32,000 shares on the market under the name of E and three others via three securities companies at the same time over 10 trading days during the period 2.
 
iii. The suspect raised the price of the shares from 1,200 yen to 1,340 yen between December 22, 2020, and December 30, 2020 (hereinafter “period 3”), in an attempt to raise the price of the shares:
 
・For the purpose of inducing sales and purchases of the shares, the suspect  purchased a total of 43,800 shares on the market over seven trading days during the period 3 by means of placing a series of high limit orders and purchasing the shares at high prices under the name of F and four others via three securities companies in order to mislead others into believing that the sales and purchases of the shares were thriving, and also conducted a series of share trading to cause fluctuations in the market prices in his/her favor.
・For the purpose of misleading others about the status of the sales and purchases of the shares, such as misleading others into believing that the sales and purchases of the shares were thriving, the suspect conducted fake sales and purchases of the shares without the transfer of right, by selling and purchasing for a total of 11,100 shares on the market under the name of C and four others via three securities companies at the same time over five trading days during the period 3, and also conspired in advance with G to sell 10,000 shares on the market under the name of C via a securities company on December 24, 2020 on the assumption that G would purchase the shares at the same price under the name of G via a securities company at the same time.

Recommendation for administrative monetary penalty payment orders against an officer (“the Officer”) of CONTEC CO., LTD. (“the Company”) who tipped the three people material non-public information about a tender offer and who encouraged others to trade in the Company’s shares and against the three people who engaged in insider trading after receiving the information.

<Summary>

The SESC recommended that the Prime Minister and the Commissioner of the FSA issue administrative monetary penalty payment orders against the Officer and the three people (“Person 1,” “Person 2” and “Person 3”) who were tipped from the Officer.
 
As a result of its investigation, the SESC found that the Officer tipped material non-public information about a tender offer and that Person 1, Person 2, and Person 3 engaged in insider trading in the Company’s shares on the basis of the information, in breach of the Financial Instruments and Exchange Act.
 
The SESC filed penalties as follows:
4,770,000 yen against the Officer;
2,420,000 yen against the Person (1);
970,000 yen penalty against the Person (2); and
880,000 yen against the Person (3).