How Japan's SEC Surveillance Commission tracks Insider Trading

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Thursday, June 16, 2016 8.45AM / MV Intelligence 

Japan's Securities And Exchange Surveillance Commission: Recommendation For Administrative Monetary Penalty Payment Order For Insider Trading Of Shares Of GameOn Co., Ltd. By Employee Of Tender Offeror Residing Abroad 

1. Contents of the Recommendation
The Securities and Exchange Surveillance Commission, today, made a recommendation to the Prime Minister and the Commissioner of the Financial Services Agency that an administrative monetary penalty payment order be issued in regard to insider trading of the shares of GameOn Co., Ltd. (“GameOn”) by an individual investor residing abroad, who is an employee of a tender offeror, pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency. This recommendation is based on the findings of the investigation into the insider trading, whereby the following violations of laws and ordinances were identified.


2. Summary of the Findings Regarding Violations of the Laws and Ordinances
The person subject to the administrative monetary penalty payment order (residing in Korea) was an employee of Neowiz Games Corporation (“Neowiz”), in regard to the person’s duties, with the knowledge of a fact concerning launch of a tender offer, which the responsible body for making decisions of Neowiz had decided to launch a tender offer of the shares of GameOn, from October 31, 2011 to November 4, 2011, which period is prior to the publication of the above fact, purchased a total of 57 shares of GameOn for 3,412,305 yen on the person’s own accounts.

The actions mentioned above conducted by the person subject to the administrative monetary penalty payment order were recognized as actions "in violation of the provisions of Article 167(1) or (3) in effecting a Purchase, etc. prescribed in Article 167(1)" as stipulated under Article 175(2) of the Financial Instruments and Exchange Act ("FIEA").

Summaries of the findings regarding the violations of the laws and ordinances are described in the Attachments 1 and 2.

3. Calculation of the Amount of the Administrative Monetary Penalty
Pursuant to the FIEA, the amount of the administrative monetary penalty applicable to the above violations is 1,600,000 yen.

Details of the calculation are presented in the Attachment 3.

4. Others
We appreciate assistance of the Financial Service Commission and the Financial Supervisory Service in Korea in this matter. 

Attachment 1

 


Attachment 2

Attachment 3
 

● Method of Calculation of the Amount of the Administrative Monetary Penalty

 

Pursuant to Article 175(2) of the FIEA, the amount of the administrative monetary penalty shall be the amount obtained by deducting the amount specified in item (b) below from the amount specified in item (a) below:

(a)The amount obtained by multiplying the highest price in the two weeks after the publication of the fact concerning launch of the tender offer by the volume of the purchase, etc. of securities

(b)The amount obtained by multiplying the price at which the person effected the purchase, etc. by the volume of the purchase, etc. of securities

 

As the highest price of GameOn share in the two weeks after the publication of the fact concerning launch of the tender offer was 88,000 yen, the amount of the administrative monetary penalty is calculated as below:

(88,000 yen x 57 shares) - Value pertaining to purchase (59,865 yen(*)x 57 shares)

= 1,603,695 yen

 

Pursuant to Article 176(2) of the FIEA, the amount of the administrative monetary penalty shall be 1,600,000 yen, which is rounded down to the nearest ten-thousand.

(*) 59,865 yen is the average value pertaining to purchase 
 

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