Japan to Take a Tougher Approach to Insider Trading

Unlocking Word Meanings
Read the following words/expressions found in today’s article.

1. insider trading (n.) [in-sahy-der treyd-ing] – the buying and selling of stocks or shares of a company based on secret or private information from someone with access to info “inside” a company

Example: He engaged in insider trading by buying company stock after his friend in the company gave him unpublished sales data.

2. penalty (n.) [pen-l-tee] – punishment for breaking a rule

Example: A heavy penalty is given on those who go against the law.

3. tip (n.) [tip] – secret information given by someone with special knowledge

Example: The CEO received a tip from a spy regarding the rival company’s financial losses.

4. be after (idiom) [bee af-ter, ahf-] – to chase and try to capture, to look for and try to get

Example: The police are after criminals.

5. trader (n.) [trey-der] – a person who buys and sells stocks or shares for profit

Example: The trader bought so many shares from Apple because the company was performing really well in the market.

Article
Read the text below.

The Securities and Exchange Surveillance Commission (SESC) in Japan is getting tough on insider trading. In its latest case, the SESC imposed a fine of $185,000—its harshest penalty yet—on First New York Securities, a US company accused of receiving a tip from someone with connections to staff of Nomura Holdings.   This is the first time a penalty was given to a trading company that did not receive information directly from a legal source. Since March this year, the SESC has fined three companies which have been similarly involved in insider trading. However, Shinsuke Amiya, a Democratic Party lawmaker and a working group member, says Japan needs stronger insider trading laws, such as taking away the operating licenses of offenders. In order to effectively discourage insider trading, Japan Securities and Dealers Association should impose higher penalties as well, says Michio Matsui, the president of Matsui Securities. He says the fines are too small and should be increased to an amount that could harm a company. Only then will people be afraid of the risks. Timothy Blakely, a US expert on insider trading, says both the person giving the tip and the trader must be penalized. For example, US authorities went after Rajat Gupta, an accused “tipper”, even though he was not a trader himself. Gupta was a board member of the large US investment bank Goldman Sachs. In Britain and the US, those involved in insider trading have to pay millions of dollars and may even be imprisoned. While SESC has been improving rules, financial experts are hoping Japan would make changes faster to protect and win back the confidence of shareholders and investors.

Viewpoint Discussion
Enjoy a discussion with your tutor. 

Discussion A 

·         What are possible negative effects of insider trading on a country’s economy?

·         How important are laws in your country? Do you think the laws are used effectively?

Discussion B

·         What experience do you have with buying company shares? If none, would you be interested to own company shares in the future? Why or why not?

·         What company do you think would be most profitable to buy shares from? Why do you think so?

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