Japan to strengthen insider trading rules Japan's financial regulator is to significantly strengthen penalties for insider trading in an effort to regain investor confidence in Japan's financial markets. Under the new rules, fines for insider trading will be raised substantially from current levels; company executives, financial intermediaries and others who leak non-public information will be subject to criminal penalties and fines; and the names of those who leak insider information will be made public. The stricter rules come in the wake of several recent cases of insider trading related to new share issues, which shook Japan's financial sector and drew criticism that Japan's rules against insider trading were too weak. Such a scandal was in large part responsible for the resignation this summer of top executives at Nomura, which admitted that staff were driven by an excessive drive for profits to leak insider information. Japan's move to adopt stricter penalties against insider trading also follows a crackdown on the activity in the US and UK, where penalties are much tougher than in Japan. Earlier this year, Rajat Gupta, a former director of McKinsey, was sentenced to two years in prison in the US and fined $5m for passing confidential information to Raj Rajaratnam, who profited from trading on that information. By comparison, under current rules in Japan, company executives, directors and others who leak non-public information that is used for trading are only subject to criminal penalties if it can be proved that they were conspirators to the insider trading. "We believe the new rules are in line with those in the west," a representative of the Financial Services Agency said. The new regulations are expected to come into force in about a year's time, he said. Japan's financial sector came under scrutiny after investors raised concerns that insider information related to new share issues was being leaked regularly by investment banks seeking business from hedge funds and asset managers. This year, Nomura admitted that staff had leaked insider information about new share issues planned by Tokyo Electric Power, Inpex and Mizuho, in 2010. Daiwa Securities also admitted to providing non-public information on a new share issue by Nippon Sheet Glass. However, neither bank faced a financial or criminal penalty since the leaking of non-public information by a financial intermediary is not illegal under current Japanese rules. Additionally, those who provide inside information, including staff at financial intermediaries, will become subject to criminal penalties and fines, even if it cannot be shown that they were assisting in any resulting insider trading activity.