No early peeks into firms’ earnings

TOKYO: Japan’s brokerage industry is moving to prevent analysts from getting early peeks into companies’ earnings, formalising guidelines after major firms took steps to curb the practice.

The Japan Securities Dealers Association (JSDA) will ask members not to seek unpublished earnings figures from companies they cover, according to draft guidelines released on Wednesday.

The practice had spurred criticism that some investors were given access to results before earnings were released, creating the possibility of unfair trading advantages.

“We’ve been moving closer to the United States-style fair disclosure rules,” said Yoshihiro Okumura, general manager at Chiba-Gin Asset Management Co.

The JSDA banning analysts from gaining undisclosed information is a natural development.

Japan has yet to put into law fair disclosure rules like those in the US that would require firms to publicly disclose material information.

For years in Japan, investors had access to early peeks into companies’ undisclosed earnings information, as companies were free to selectively share material information, allowing analysts to write up earnings preview reports that informed clients.

At least five major brokerages, including Credit Suisse Group AG, this year have banned analysts from talking to companies for preview notes, jolted into action by an official censure of Deutsche Bank AG’s local research unit in December and a regulatory report in April that called for new disclosure rules.

The JSDA guideline bans analysts from talking to firms to gain data on undisclosed profits, sales, order numbers, and any qualitative information on changes in earning trends.