Is the judiciary doing all it could?
A Japanese public company named “Tella” filed for bankruptcy in August. The biotech firm was created by Dr. Yuichiro Yazaki, a medical professional who promoted a new cancer immunotherapy. At the time of bankruptcy, the company’s stated capital was over 3 billion yen, and together with the capital reserve, investors had invested over 6 billion, all of which was lost.
Although one member of the board was found guilty of insider trading, as the company disseminated false information about the launch of a COVID-19 product in Mexico, among others. Nevertheless, one would wonder if the injection of capital and subsequent sales were in fact fraud.
Indeed, in a similar case of misrepresentation, a U.S. court held the CEO of a biotech company guilty of fraud in enticing investors with false information. Why then are Japanese prosecutors reluctant to bring a fraud case, which is the essence of the wrongdoing? A fraud verdict could result in imprisonment of 10 years or longer, a prison term comparable to that facing the American CEO, whereas an insider trader faces only 5 years. If this results from incompetence of the prosecution or the judiciary, the Japanese legal enforcement’s weakness may be the cause of the inefficient capital market, and rectifying the judicial environment should be the primary task of Premier Kishida.