TOKYO -- A former outside director at Sumida was arrested on Tuesday for alleged insider trading in a blow to a Japanese electronic parts maker once known as a pioneer in corporate governance.
Tokyo investigators say Soichiro Uchida is suspected of buying about 80,000 shares in the company for 88 million yen ($810,000 at current rates) under an acquaintance's name in January 2017, based on dividend information not yet made public.
Sumida's stock price jumped that February, when it announced a 2016 year-end dividend of 16 yen a share -- up from the previously forecast 6 yen.
Uchida, a former autoparts industry executive, became an outside director in 2014. He stepped down this past December for "personal reasons."
Sumida "will continue to offer its full support to the efforts of the investigations," it said in a Tuesday statement. The company's products include electrical coils for automobiles.
The Financial Services Agency and the Tokyo Stock Exchange issued a corporate governance code in 2015, calling on publicly traded companies to appoint two or more independent directors. Sumida took this step before many others.
As of 2017, about 90% of companies listed on the TSE's first section had appointed multiple directors.
Many now face the related problem of improving a dismal record on appointing female directors -- an effort that has resulted in many women serving on multiple boards.
Outside directors' role is to exercise independent oversight over management on behalf of shareholders. As such, they are held to high ethical standards.
"Companies need to take such steps as training on compliance," said Isao Sakai, president of ProNed, a Tokyo-based provider of governance advice.