Recommendation for Administrative Monetary Penalty Payment Order for Insider Trading in ZOZO, Inc. Stock by an Individual Residing Abroad (September 8, 2023)

Recommendation for Administrative Monetary Penalty Payment Order for Insider Trading in ZOZO, Inc. Stock by an Individual 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 in the stock of ZOZO, Inc. ("ZOZO") by an individual pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency. This recommendation is based on the findings of an investigation into a suspected instance of insider trading, whereby the following violation of laws and ordinances was identified.

2. Summary of the Findings Regarding Violations of Laws and Ordinances

The person subject to administrative monetary payment order (residing in China), was an officer who worked for a subsidiary of ZOZO in China.

The individual was informed by employee A of ZOZO of material non-public information ("MNPI") that the body responsible for making decisions at Yahoo Japan Corporation (currently named Z Holdings Corporation) had decided to implement a tender offer for ZOZO shares, while employee A came to know the MNPI in the course of his/her duties via a director of ZOZO who was informed of it by Yahoo in the course of his/her duties.

Then, the individual purchased a total of 25,977 shares of ZOZO for 54,895,128 yen on September 10, 2019 in advance of the disclosure of the MNPI released on September 12, 2019.
A summary of the findings is shown in the Chart.

The individual's aforesaid action was found to be "effecting a purchase, etc. involving the specified share certificates, etc. or related share certificates, etc. set forth in Article 167(1) in violation of the provisions of Article 167(3)" as stipulated under Article 175 (2) (ii) of the Financial Instruments and Exchange Act ("FIEA").

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 violation is 13,030,000 yen. (Note: Details of the calculation are shown in the Attachment.)

4. Acknowledgements

We appreciate the assistance of China Securities Regulatory Commission and the Japan Exchange Regulation with this matter.

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