Japan

The Securities and Exchange Surveillance Commission (SESC) represents the apex body for monitoring the financial markets and enforcing regulations in Japan and is structured as an independent commission under the purview of the Financial Services Agency (FSA). Headed by a chairperson and two other specially designated commissioners nominated by the Prime Minister in consultation with the National Diet, the commission acts as a very objective policing agency insulated from any influence of commerce. The scope of its regulation extends to cover the entire capital market landscape of Japan, and it enjoys sovereign power to monitor and investigate all listed public companies, securities dealers, investment companies, asset managers, and individual traders in Japan.

The role of the Securities and Exchange Surveillance Commission (SESC) includes the maintenance of fair, transparent, and orderly capital markets through proactive detection and sanctions for market misconduct. The SESC carries out constant market surveillance, and if any irregularities in transactions are noticed, it carries out forensic analysis of complex forms of financial crime, including insider trading, market manipulation, and accounting fraud by listed companies. Besides, it carries out strict examinations of the securities broker-dealers and investment managers to ensure their compliance with the FIEA. While the SEC does not enjoy independent investigatory power, it acts as an instrument of first force in that it offers recommendations that carry legal weight to the FSA for administering strict sanctions against a violator or referring the case to the prosecution.