FINRA Bars Broker for Insider Trading in Japanese Securities

FINRA announced that it barred a former equity trader at First New York Securities L.L.C. for trading Japanese securities on the basis of material, non-publicized information that he received from a corporate insider.

FINRA's investigation determined that the broker created a short position in shares of the Japanese Company, Tokyo Electric Power Company Inc. ("TEPCO"), while he was in possession of material, non-public information that TEPCO was close to announcing a secondary public offering. The information was said to be obtained from a consultant whose source was a Tokyo-based employee of Nomura Securities Co. Ltd., which underwrote the TEPCO offering.

After receiving the inside information, the broker traded in TEPCO shares between September 15, 2010 and September 28, 2010. After TEPCO publicly announced the secondary offering on September 29, 2010, the broker then covered the short position and realized a profit of approximately $206,000.

See: FINRA Press Release.See also: Insider Trading Materials (available to Cabinet subscribers only).