Tokyo court hands 2-year sentence to FSA employee, former judge for insider trading

Tokyo District Court judge Masaru Nomura says that former judge and Financial Services Agency (FSA) employee Soichiro Sato’s insider trading abuse has “greatly damaged” market soundness and the “trust of ordinary investors” in Japan. Sato was given a 2-year prison sentence and fined for buying shares in around 10 tender offers before they were made public. 

Sato’s defense reportedly argued that his investment of around ¥9.5 million (~$63,000 at current exchange rates) and subsequent profit of about ¥3.93 million, was not as bad as similar cases, but the 32-year-old former judge and FSA employee nonetheless received a 2-year prison sentence and fines adding up to around ¥11.2 million. Also tacked on to the sentence were four years of probation.

According to local media, Sato argued that he (translated) “wanted to understand the market mechanism from the perspective of a shareholder,” elaborating: “I wanted to have financial security for my aging parents and young children. My awareness of the illegality faded away.”

The former judge, indicted back in December, was in charge of reviewing information and documents related to takeover bids at the Financial Services Agency’s Corporate Disclosure Division. The info he had access to through his role as assistant director made him privy to lucrative investments.

Judge Nomura noted: “The fairness and soundness of the market and the trust of ordinary investors in the market have been greatly damaged.”

The sentence, dealt out today on Wednesday, March 26 (JST), comes at a time when residents of Japan are already losing faith in government’s ability to manage economic matters. As the FSA seeks to regulate finance and crypto through stringent regulations and surveillance, anti-crypto Prime Minister Shigeru Ishiba’s approval rating is low, rice has doubled in price in the span of one year, and inflation continues to wrack the island nation.

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