Reiwa 6 Special (Wa) 3846 Financial Instruments and Exchange Act Violation Case

In 2025, the Tokyo District Court adjudicated case Reiwa 6 Special (Wa) 3846 concerning violations of the Financial Instruments and Exchange Act. The defendant, Hiroshi Tanaka, a former executive of a publicly listed IT corporation, was charged with insider trading. Before a major capital and business alliance was publicly disclosed in mid-2024, Tanaka purchased a substantial block of his company’s shares using non-public information. After the announcement caused the stock price to surge, he sold the shares, realizing an illicit profit of approximately 50 million yen. The Tokyo District Public Prosecutors Office Special Investigation Squad indicted him following a referral from the Securities and Exchange Surveillance Commission. The trial examined trade records, internal communication logs, and the timing of the information leak. The court ultimately convicted Tanaka, highlighting the deliberate misuse of confidential corporate information.

The Tokyo District Court found Hiroshi Tanaka guilty. He was sentenced to two years in prison, suspended for three years, and ordered to pay a fine of 5 million yen, with the full amount of the illegal profits confiscated.

The primary dispute was whether the undisclosed alliance details legally constituted “material facts” under the Financial Instruments and Exchange Act, and whether the defendant possessed clear criminal intent to trade on that non-public information rather than on general market speculation or pre-existing investment plans.

The verdict reaffirmed Japan’s strict zero-tolerance policy toward insider trading, intensifying public and corporate attention on compliance. It prompted numerous listed companies to tighten internal information barriers, revise insider trading prevention manuals, and increase whistleblower protections. The case also accelerated discussions within the Financial Services Agency on strengthening real-time market surveillance tools to detect suspicious trading patterns earlier.