Bloomberg
Trader arrested as WallStreetBets phenomenon echoes in Japan
(Bloomberg) – A small investor buys shares in a small company, expresses his position on social media and inspires a horde of followers to do the same. The share price goes to the moon – before crashing back to earth. This is an all too familiar story for anyone watching the market in 2021, but it was not GameStop Corp. It was not even in America. And that happened in 2018. It was in the Japanese city of Osaka, where a day trader nicknamed Tonpin, on a small manufacturer of precision die-cuts and shapes called Nichidai Corp. waved and broadcast the fact on Twitter, where he has more than 55,000 followers. The stock rose more than sixfold in the first three months of 2018 before losing the most gains. The person behind the nickname was Toru Yamada, a former money manager, and he and another man were arrested according to the Japanese pass for market manipulation. media reports. He was arrested not because he talked the stock on Twitter, but because he suspected he wanted to keep the stock price, even though it would remove the restrictions on margin trading, which would have lifted the stock to new highs. The incident shows how regulators go through unusual trading patterns and come to conclusions years later. This could arouse the interest of protagonists and observers of the recent protest in the US, such as users of the RedStit forum WallStreetBets. Yamada has yet to be charged, and it is not clear if he will do so. And while no one is suggesting that U.S. traders use similar tactics as he apparently used, the case illustrates the risks that can be associated with becoming a high-investor on social media. While you are in the public spotlight, you may also be on the right side of the regulators. “Everyone is going to be on the hook,” said Taketsugu Agari, the investor known as Takezo on Twitter, where he has nearly 100,000 followers. “People do not know what is right and wrong,” he said. “People do not know the rules.” Calls and instant Twitter messages to Yamada are unanswered. The state prosecutor in Osaka declined to comment. The Securities and Exchange Surveillance Commission, the Japanese market watchdog, was not immediately available for comment. According to local media reports, according to local media reports, prosecutors did not make clear whether the men admitted or denied the charges. A regulatory statement shows that Yamada’s first purchase of Nichidai shares was on December 8, 2017, and it has gradually increased its stake. By the time he first tweeted about it, the shares had almost tripled on February 1 the following year. According to the media, Yamada and another man placed a large number of sales orders below the market price in March just before the end. reports. The intention was to keep the share price below a certain level to ensure that the restrictions on new margin trading on the stock are lifted, the reports say. The stock was exempt from the measures and rose to 18% at the next trading session on March 12. In a tweet on March 10, Yamada appeared to have discussed this process, showing just before the end a snapshot of Nichidai trading, although it is unclear. if it were his trades. Aside from his arrest, Yamada has had many clashes on Twitter over the years over his discussions of his investments. “The authorities need to introduce some regulations,” said Soichiro Iwamoto, a longtime trader whose firm gives new advice. investors, said in an interview about the use of shares on social media. “Investors here do not have enough financial literacy.” Others wondered what exactly Yamada did wrong. “It is surprising that selling to release the margin restrictions is considered market manipulation,” says Akira Katayama, a well-respected trader known as Gogatsu. , he wrote after his arrest. Japanese retail investors have been advocating for the country’s thousands of stocks with thin trading online for more than a decade, starting on the notice boards that were popular in the mid to late 2000s before moving to Twitter, the most important platform in recent years. .The most famous became known as ‘locust rulers’ to attract a swarm of day traders. Yamada became the last of the gentlemen to remain silent in June when he said he was taking a breather from Twitter after his account was briefly closed. Okansanman, an anonymous account with over 175,000 followers known for its fast delivery of breaks. news, went dark in early 2019 and did not reappear. The mysterious Twitter user who signs a swarm of Japanese traders Yamada worked at two Chinese government-related funds before starting as a day trader in Japan in 2013, he told Bloomberg News last year. Even before his arrest, he shared the opinion on Twitter, with devoted followers imitating his trades and others accusing him of being a manipulator, using his influence to inflate shares before dumping them. “When many Japanese people lose, they want to blame it. on someone else, ”he said last year, dispelling his critics. Followers may have to wait to know the fate of Yamada. Under Japanese law, he could be detained for 23 days before being charged. Meanwhile, many of its counterparts in the country who would like to book shares are moving from Twitter to other locations, including encrypted messaging apps like Line and Newer. platforms like Clubhouse, according to investor Agari. This makes it harder for regulators to monitor, he said. Read more: GameStop Frenzy Is Lost in Translation for Japan’s Day Traders As for the consequences of the GameStop saga, it’s someone’s guess. If there is anything from the Japanese experience, any regulatory action could take a long time if it materializes at all. “It’s been going on for over a decade, even though people have been using notice boards,” Agari said. , referring to retail investors who discuss stocks online. “America is starting to look like Japan.” (Updates to include more details) For more articles like this, please visit us at bloomberg.com. Sign up now to stay ahead of the most trusted business resource. © 2021 Bloomberg LP