take-over bid with the purpose of providing benefit to a third party, and also made recommendations on a case involving an operator that manipulated the market by using a proprietary trading system (PTS) and a case in which a stock price was supported through fraudulent means in order to maintain the listing of the company.

In addition, with respect to cross-border market misconduct by foreign investors, the SESC conducted investigations in close collaboration with overseas regulators under the global framework for cooperation and information exchange and made recommendations for administrative monetary penalty payment orders. The representative cases include: an insider trading case by an overseas individual investor who learned a material facts in the course of negotiation for a contract; a market manipulation case in which an overseas institutional investor took advantage of the difference in operating hours of a stock exchange and a PTS through transactions overarching between them: and another market manipulation case in which an investor placed sell orders at high prices without intention to execute the orders and repurchased the shares at artificially lowered price.

With respect to the violation of disclosure requirements, the SESC made recommendations to the FSA to order an administrative monetary penalty against a listed company that, among others, in an attempt to accelerate recovery from a steep decline in earnings, committed inappropriate accounting with various, including recording profits earlier, deferring expenses and understated allowances. The SESC also made a recommendation in a case in which some false descriptions were made in a securities registration statement.

In an effort of the flexibility of its disclosure inspection, the SESC commenced gathering and analyzing information, to focus on potential risks of material misstatement associated with changes in the business environment of listed companies. Moreover, for listed companies that committed false statements, the SESC enhanced efforts to urge such firms, to correct early and voluntarily the disclosure statements, and to establish an appropriate disclosure system through identifying the root cause of the violation in accordance with the nature of the case.

The SESC has conducted a wide range of market surveillance and filed criminal charges against malicious criminal acts that impair the fairness of markets.

The SESC recently filed criminal charges against a representative director and a managing director of a listed company for using fraudulent means and submitting an annual securities report containing false disclosure statements. To gain profits by selling the shares of the company, they published timely disclosure statements containing a false statement that the company revised figures such as net sales and ordinary profit upward and other false information. This case may be seen as a broader financial crime because, in relation to this case, a de facto owner of another company that had business with the company above was prosecuted on charges of fraud and violation of the Customs Act.

In addition, the SESC filed charges against individual investors for spreading rumors, using fraudulent means and failing to submit Reports of Possession of Large Volume in relation to shares of two listed companies. They raised prices of the shares of the companies by publicizing statements including false information on a website, to which many and unspecified persons can access, and sold a large amount of shares at artificially raised prices. The SESC also filed charges against the same investors for committing market manipulation on the shares of one of the two companies above by using methods such as raising the share