Singapore hedge fund challenges Japan regulator over insider charge

Nippon Sheet Glass

19/09/2014 13:17

TOKYO, Sept 19 (Reuters) - A small Singapore-based hedge 
fund accused of insider trading in Japan is disputing the 
charge, the latest financial institution to brave the odds and 
challenge the regulator in an attempt to stave off damage to its 
reputation. 
    Last year, Japan's Securities and Exchange Surveillance 
Commission (SESC) accused MAM Pte of acting on an insider tip 
about a share offering by Nippon Sheet Glass  5202.T  and 
demanded the hedge fund pay a penalty of 8 million yen 
($74,710). 
    The regulators' case against MAM was based on testimony from 
Junpei Harino, a former JP Morgan employee who admitted to 
passing on information to the fund. 
    During a hearing on Friday, Harino changed his testimony, 
and said he had not passed on insider information. SESC 
officials were present at the hearing and also questioned 
Harino. Asked about the case, legal representatives for MAM said 
the fund was not guilty of insider trading. 
    MAM's case comes almost three months after Stats Investment 
Management, a small Japanese hedge fund, also disputed the 
regulators' finding of insider trading linked to an offering by 
energy firm Inpex Corp  1605.T .  
    Such challenges are uncommon in Japan, largely because most 
financial firms would rather pay the fine than risk courting the 
ire of the regulator and alarming clients. 
    The odds are also not in the companies' favour: Japanese 
courts have ruled in favour of financial institutions in only 
two out of 313 cases bought against the regulator, lawyers say. 
    Naohiko Matsuo, a lawyer at legal firm Nishimura & Asahi, 
said the regulator can sometimes be too hasty in its ruling. "In 
the West, normally, you'd try to show your innocence by 
challenging such charges," he added. 
    Japan's financial regulator has toughened its crackdown on 
insider trading since 2010. So far, it has levied fines against  
the country's top brokerages Nomura Holdings  8604.T  and Daiwa 
Securities Group  8601.T , and like most institutions charged, 
the companies agreed to pay the penalties. 
 
 (Reporting by Ritsuko Ando; Editing by Miral Fahmy) 
 ((Ritsuko.Ando@reuters.com; +81 3 6441 1743; Reuters Messaging: 
ritsuko.ando.thomsonreuters.com@reuters.net)) 
 
Keywords: JAPAN COURTS/HEDGEFUNDS