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Shopkeeper arrested as WallStreetBets phenomenon resonates in Japan
(Bloomberg) – A retail investor buys shares in a small company, touts its position on social media, and inspires a horde of followers to do the same. The stock price goes on the moon – before it crumbles on earth. It’s a story far too familiar to anyone looking at the market in 2021, but it wasn’t GameStop Corp. It wasn’t even in America. And it happened in 2018, it was in the Japanese city of Osaka, where a day trader, nicknamed Tonpin, was betting on a small die and precision mold maker called Nichidai Corp. and disseminated the fact on Twitter, where he has over 55,000 followers. The stock rose more than six-fold in the first three months of 2018 before losing most of the gains.The person behind the moniker was Toru Yamada, a former fund manager, and he and another man are from be arrested for market manipulation, according to the Japanese. media reports. He was not arrested for talking about the rise in shares on Twitter, but on suspicion of trying to keep the share price low – although the margin trading restrictions are being removed, which , when that happened, took stocks to new highs. This incident shows how regulators sift through unusual trading patterns and come to conclusions often years later. This could pique the interest of protagonists and observers of the recent rally in meme stocks in the United States, such as users of the Reddit WallStreetBets forum. Yamada has yet to be charged, and it is not known whether he is. will be. And while no one is suggesting that U.S. traders used tactics similar to what they allegedly used, the case illustrates the risks that can be associated with becoming a top social media investor. While you are in the public spotlight, you may also be in the sights of regulators. “Everyone is going to be on their toes,” Taketsugu Agari, the investor known as Takezo, said on Twitter, where he has nearly 100,000 followers. “People don’t know what’s right and what’s wrong,” he says. “People don’t know the rules.” Direct Twitter calls and messages to Yamada went unanswered. The Osaka District Procuratorate declined to comment. The Securities and Exchange Surveillance Commission, the watchdog of the Japanese market, was not immediately available for comment. Prosecutors did not say whether the men admitted or denied the charges, according to local media. A regulatory record shows that Yamada’s first disclosed purchase of Nichidai shares took place on December 8, 2017, and it has gradually grown. increased its participation. By the time he first tweeted about it on February 1 of the following year, stocks had nearly tripled. In March, Yamada and another man placed a large number of sell orders below market price just before the close, media reported. reports. Their intention was to keep the stock price below a certain level to ensure that restrictions on new margin trades on the stock were lifted, according to the reports. The stock was released from the measures and jumped 18% on March 12 on its next trade. In a March 10 tweet, Yamada appeared to discuss this process, showing screenshots of Nichidai’s trades just before the trade. fence, although it is not clear. Separated from his arrest, Yamada has had numerous clashes on Twitter over the years over his discussions about his investments. “The authorities need to put regulations in place,” Soichiro Iwamoto, a longtime trader whose company advises new investors, said in an interview, speaking of the practice of talking about stocks on social media. “Investors here don’t have enough financial knowledge.” Others wondered what Yamada had done wrong. “It’s amazing that selling to release margin restrictions is treated as market manipulation,” Akira Katayama, a well-followed day trader known as Gogatsu Japanese retail investors defend thousands of thinly traded stocks in nationwide for over a decade, starting with popular bulletin boards in the mid to late 2000s before moving to Twitter, the dominant platform in recent years. . The most prominent are known as the “Locust Lords” for attracting a swarm of day traders. Yamada became the last of the Lords to be silent in June, when he said he was taking a hiatus from Twitter after his account was briefly locked out. Mysterious Twitter user drawing a swarm of Japanese traders Yamada worked at two funds linked to the Chinese government before stepping down as a day trader in Japan in 2013, he told Bloomberg News last year. He split opinion on Twitter even before his arrest, with staunch followers who mimicked his trades and others who accused him of being a manipulator, using his influence to inflate stocks before throwing them away. “When many Japanese lose, they want to blame him. on someone else, ”he said last year, brushing aside his criticism. Followers may have to wait to find out about Yamada’s fate. Under Japanese law, he can be detained for up to 23 days before charges are laid, while many of his counterparts in the country who like to discuss the actions are moving from Twitter to other venues, including apps. encrypted mailboxes such as Line and newer. platforms like Clubhouse, according to investor Agari. This makes oversight more difficult for regulators, he said.Read More: GameStop Frenzy Lost in Translation for Day Traders in Japan As for the fallout from the GameStop saga, everyone’s guessing. If the Japanese experience is anything to follow, regulatory measures could be long in coming, if they materialize. “This has been going on for over a decade, back when people used message boards,” said Agari, referring to retail investors who talk about 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 Subscribe now to stay ahead with the most trusted source of business news. © 2021 Bloomberg LP
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