More bad news for J.P. Morgan Chase ? regulators in Japan have found that a Japanese employee of JP Morgan was involved in insider trading in connection with a share offering by Nippon Sheet Glass Co. The employee, who was not identified, reportedly leaked inside information to people at Asuka Asset Management. This latest revelation comes less than 3 weeks after J.P. Morgan disclosed losses of more than $3 billion by its “gunslinger” traders in London. “JPMorgan Employee Said to be Linked to Insider Trading,” Bloomberg.
The Japanese insider trading probe resulted from criticism that insider trading is eroding investors’ confidence. JP Morgan and Daiwa Securities Group were the lead underwriters of the Nippon Sheet Glass deal, according to the article.
In the United States, insider trading has become “rampant and routine” according to federal prosecutor Preet Bahara. The U.S. Securities and Exchange Commission has made insider trading cases a top enforcement priority because of the deleterious effect it has on investor confidence, which is essential for markets to function properly.
In addition to civil enforcement actions brought by the SEC, the U.S. Department of Justice has prosecuted criminal cases against a number of high profile individuals accused of insider trading based on evidence obtained from wiretapped conversations. Most notably, Galleon Group founder Raj Rajaratnam was convicted of a massive insider trading scheme and received an 11-year sentence.
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