SESC Latest Topics No.99＜June 2024＞

Recommendation for Administrative Disciplinary Action against Ava Trade Japan K.K.

<Summary>

The SESC recommended that the Prime Minister and the Commissioner of the FSA take administrative disciplinary action against Ava Trade Japan K.K. (hereinafter "the Company"), a Type I Financial Instruments Business Operator and Investment Advisor/Agency.

This recommendation is based on the findings of an inspection of the Company whereby the Director-General of the Kanto Local Finance Bureau identified that the Company had conducted a stress test using falsified data.

Specifically, in order to avoid worsening the results of the stress test, the president of the Company falsified customer data by requesting the parent company to conduct the stress test using falsified data.

As a result, the Company did not report the results of the stress test based on correct data to the Financial Futures Association of Japan. In addition, the company needed to take measures to ensure the soundness of management, based on the results of the stress test, but it did not take those specific measures.

Recommendation for Administrative Disciplinary Action against Asunaro Co., Ltd.

<Summary>

The SESC recommended that the Prime Minister and the Commissioner of the FSA take administrative disciplinary action against Asunaro Co., Ltd (hereinafter "the Company"), an Investment Advisor/Agency.

This recommendation is based on the findings of an inspection of the Company whereby the Director-General of the Kanto Local Finance Bureau identified that the Company had not worked faithfully on behalf of its customers.

Specifically, General Manager A, who is head of the investment advisory business of the Company, provided trading advice, etc. to specific customers for at least 20 of the 55 advisory issues provided by the Company between May 2022 and March 2023, prior to their provision to general customers. Furthermore, the Company overlooked the actions of General Manager A and did not establish an environment to prevent such actions.

Recommendation for an administrative monetary penalty payment order against an officer (“the Officer”) of Kozosushi Co., Ltd. (“the Company”) who engaged in insider trading.

<Summary>

The SESC recommended that the Prime Minister and the Commissioner of the FSA issue an administrative monetary penalty payment order of 5,390,000 yen against the Officer who engaged in insider trading.
 
As a result of its investigation, the SESC found that the Officer learned material nonpublic information about a forecast of the Company’s sales and earnings during the course of their duties and then sold the shares based on the information in violation of the Financial Instruments and Exchange Act.

Recommendation for an administrative monetary penalty payment order against an employee (“the Employee”) of a subsidiary of Kozosushi Co., Ltd. (“the Company”) who engaged in insider trading.

<Summary>

The SESC recommended that the Prime Minister and the Commissioner of the FSA issue an administrative monetary penalty payment order of 290,000 yen against the Employee who engaged in insider trading.
 
As a result of its investigation, the SESC found that the Employee, who worked for a subsidiary of the Company, was tipped off by another employee of the Company, who had learned material nonpublic information about changes to the shareholder structure in the subsidiary during the course of their duties, and the Employee then sold the shares of the Company based on the information in violation of the Financial Instruments and Exchange Act.

Filing a criminal charge of committing insider trading of the shares of Abalance Corporation.

<Summary>

The SESC filed a criminal charge against a suspect with the Tokyo District Public Prosecutors Office for violation of the Financial Instruments and Exchange Act (hereinafter “FIEA”) (insider trading).
 
The suspect, who was a Corporate Officer of Abalance Corporation (hereinafter “Abalance”), which listed its shares on the securities market established by the Tokyo Stock Exchange (hereinafter “TSE”), around mid-January 2023, came to know in the course of duties a material fact concerning the business, etc. of Abalance, to the effect that the executive decision-making body of its subsidiary that engages in the manufacture and sale of solar panels had made a decision to acquire fixed assets, and purchased a total of 19,400 shares of Abalance for a total of approximately 53.16 million yen on the TSE under the name of the suspect via a securities firm around late January 2023, prior to the announcement of the material fact, despite there being no applicable exemption clause under the FIEA.

Recommendation for an administrative monetary penalty payment order against ARDEPRO 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 21,000,000 yen against ARDEPRO Co., Ltd. (hereinafter, “ARDEPRO”). As a result of an inspection from a disclosure-regulation perspective, the SESC accordingly recognized that ARDEPRO had submitted a Quarterly Report containing consolidated financial statements including excessive sales due to improper accounting treatment.

Through an inspection of ARDEPRO’s disclosure statements, the SESC also recognized that ARDEPRO failed to disclose transactions with subsidiary companies of the company controlled by ARDEPRO’s major shareholder in the Notes on “Transactions with Related Parties” in its consolidated financial statements.