The failure of insider trading regulation in Japan is the product of social acceptance, traditional business structure, and the political self-interest. These factors explain why recent amendments to Japan's securities laws, adopted as a response to public outrage over government involvement in the Recruit-Cosmos scandal, are not a significant improvement. Part II will explain the limitations on the United States' ability to police foreign markets. Part III will compare insider trading regulation in the United States with the insider trading regulation that existed in Japan prior to the implementation of the new law in 1989. Part IV will explore the three primary causes for the failure of insider trading and market manipulation regulation in Japan. Part V will examine the recent changes in Japanese regulation. This Note will conclude that new legislation adopted by the Japanese Diet is unlikely to provide any significant improvement, but that some change is necessary to protect other participant markets from the speculative excesses in the Japanese markets.



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