Comparative Analysis of Carlos Ghosn Securities Law Violations

This report provides a comprehensive analysis of Carlos Ghosn's case concerning securities law violations, focusing on insider trading and comparative law. It begins with an introduction to trading and securities laws, setting the stage for an examination of insider trading laws in the US and Japan. The report delves into the Sarbanes-Oxley Act and the Financial Instruments and Exchange Act (J-SOX), highlighting their roles in corporate governance and financial reporting. A critical analysis of the prosecution of Carlos Ghosn for securities law violations follows, exploring Nissan's turnaround and Ghosn's leadership style, including the cultural factors influencing the company's performance. Furthermore, the report analyzes the 2015 Olympus accounting scandal, assessing the effectiveness of Japanese securities laws in protecting investors. The report concludes by summarizing the key findings and implications of the analysis, offering insights into the complexities of international securities law and corporate governance.

CARLOS GHOSN FOR
SECURITIES LAW
VIOLATIONS

INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
Comparison of insider trade laws of US and Japan.....................................................................4
Critical analysis of the prosecution of Carlos Ghosn for securities law violations....................7
Analysis of the 2015 Olympus accounting scandal and whether Japanese securities laws
functioned effectively to protect investors................................................................................11
CONCLUSION..............................................................................................................................12
REFRENCES.................................................................................................................................13

INTRODUCTION
Law is an very important part of an organization that has been dealing with peace and
balance in society these are concrete rules and regulation that has been formed in order to control
crime within an country. These are very important to deal with various elements of society.
Trading laws are those laws which have been dealing with various aspects related to trade at both
national and international level. Such laws bound both the countries of entities to work within
framework of laws which are being formed in both the countries. Security laws are the laws that
are responsible for maintaining security of all individuals and [public at large. This file is based
upon trading laws and securities laws. Things that are going to be talked about in this file are
trade laws of both US and Japan. Further security laws with Carlos Ghosn case. In the end 2015
Olympic scandal has to be critically analyzed.
MAIN BODY
Comparison of insider trade laws of US and Japan
Insider trading is that kind of trading in which an corporation or other securities like
stock options and bond through an individual that has been related to an company which is
having access to an non-public information to an organization that has not been disclosed to an
general public. This means that when an information of an organization that is very secret has
been disclosed by a person that is related to the organization in public. In most of the countries
trading by corporate insiders like employees and shareholders is considered to be legal only
when the intention is not to harm the privacy of the evitable information of an organization. As if
done for such purpose then it is going to harm the investor’s confidence. Insider trading is
referred to as that kind of practice in which an insider or related party that is referred to as those
members which work at higher position in an organization and knows about that information
which is non- public. In this an breach of fiduciary order also takes place which means trust is
not there or where non-public information has been misappropriated from the organization.
Illegal kind of insider trading in security(selling of buying of stock) is based on material

information that is not available to general public. Such kind of ct is being prohibited in both US
and Japan (Jacoby, 2018).
Sarbanes-Oxley Act
The act that has been attempting over restore of public confidence that corporations have been
squandered away. A responsibility of public research is only over informing of public in order to
diverse issue that surface. Advantages and disadvantages is needed to be discussed at length and
significant impact of Sarbanes-Oxley Act which is there to make board of directors that is more
inquisitive items that is presented for approval to them.
Historically, items presented to board of directors might have been a simple “rubber stamp.”
Now, board of directors need to be aware of the ramifications of their approval. Recently, the
percentage of chief executive officers who were forced out by their boards rose significantly. On
an average, directions has now been spending 50% more time each month over the responsibilities
that is being given to them. This is helpful in rising of the visibility of procedure corporate
accountability. Speculations that has been declared corporate mergers and acquisitions. Upon
rationale is that the due diligence process for acquisitions could conceivably be lengthened
because of the directors taking their responsibility more seriously. In addition, an effective
compliance program can mitigate the amount of a criminal fine imposed under the act’s
guidelines improve processes to eliminate criminal opportunities, establishing of requirement for
corporate adherence to the act and promote good corporate citizenship (Hai, 2019).
The Financial Instruments and Exchange Act (J-SOX) this is n set of Japanese standards
for evaluating and auditing of internal control over finances reporting which is also referred as
the Standards. Based on these requirements all the organizations that has been listed in Japan
has to perform risk assessments and has prepared, submit internal control report upon
consideration and consolidation bases that are going to start with fiscal year commencing from
1st of April. This continues till March 31st.
J-SOX requirements are the Japanese equivalent to U.S. SOX in relation to Sections 302
"Corporate Responsibility for Financial Reports" and 404 "Management Assessment of
Internal Controls." Both regulations are aimed at evaluating internal control systems relating to
financial reporting, assure the proper expression of external financial reporting with

requirement of financial-report certifications by the CEO and CFO, and prevent the recurrence
of investor deception.
As these are a number of similar and differences that has been needed over addressing
through companies, especially subsidiaries that is located in both Japan and U.S. Overall J-
SOX requirements is an initiative over U.S. SOX. The Internal Control Reporting System in
Japan looked over avoiding burden and confusion.
J-SOX Specifics:
Internal control is upon financial reporting that is willing to include not only
financial statement but also other area of security reports. Evaluation over certain controls
has been affiliated accounts in accordance with equity method of accounting. Evaluation of
an entity-level and internal control which includes book closing and financial reporting that
is required to process all the units of business. Also companies have to focus upon processes
which have to be related upon closing books and reporting. The significance is related to
business objective of a company. A material weaknesses has been reported with the effect of
misstatement which is greater than 5% of consolidation pre-tax income.
J-Sox Overall:
Internal assessment report is required to be audited and must be certified also through
independent accountants is going to attest over the reliability. Under U.S. SOX requirements,
has an addition assessing a management generated internal control; over the report. Certifying
accountants should also perform an audit of effectiveness of an organizations management
generated and internal control assessment report. U.S requirement has to form an alignment
with J-SOX for approval of Accounting Standards No 5. Manger of a company has been
responsible for designing and implementing of an internal control system. Management of
report is based upon accuracy over discloser and internal control of an organization (Girard and
Gates, 2020).
Information Subjected to the Rules:
 Consolidated financial statements and their footnotes in the financial section of
Securities Report.

 Disclosures that have a significant impact on the reliability of financial statements in
other sections of the Securities Report.
J-SOX Internal Control Framework:
 J-SOX framework that has been included upon an objective of “preservation of assets”.
Including addition to COSO objectives.
 J-SOX framework has been included as an element of “Response to IT” in addition
over five COSO elements.
Evaluation Steps for J-SOX:
 Determination of the scope should be reasonably considered that materiality of an
quantitative and qualitative impacts over financial reporting.
 Evaluation at organizational level internal control has been list of elements which are
similar to COSO.
Evaluate process-level internal control over closure and financial report. This has been control
and has been divided into company-level. For Japanese organizations has to be recognized over
the issues for evaluating and establishing effectiveness on internal control.
Critical analysis of the prosecution of Carlos Ghosn for securities law violations
Nissan is able to compete successfully within the automobile industry for very long time. In
the early nineties they were at an very crucial point because of loss and debt which has been accruing
in the organization. This was resulting into making its lose its value and a turnover was requirement
over the company for its survival. Nissan got such opportunity within the form of Renault this
resulted into Carlos Ghosn coming into existence as the first non- Japanese Chief Operating Officer
in the history of Nissan. It was not an easy task for Ghosn but still he come to Japan with a revival
plan in the hope of gaining success. After years of an aggressive restriction growth was shown by
Nissan in much impressive manner. Ghosn knew that he is required to back Renault (Fernandes,
2019).
Carol Ghosn’s approach to turn Nissan around has become a successful and effective approach. One
aspect of this is that turnaround has made and impressive growth and profitability. Another aspect is
that has not been explicit in case is the actual turnaround that has been set in the mind set of

employer’s. Due to this Japanese culture was able to develop a different way of thinking which
has been identified over a critical success of the turnaround. Such a huge turnover is a success
there has to be a restricting has been proven to be sustainable to long term also. Nissan was
seeking change but the cultural differences are going to be a very big barrier. Ghosn’s leadership
style is based upon culture and resistance change. Nissan’s mindset and culture has to be
permitted by both national and organizational. Japan has to further evaluate in relation to Ghosn
Style of leadership and his cultural approach. This is going to highlight all advantages or
disadvantages that are useful in securing of business in an organization. In relation to culture
management is very important and has to evaluate upon resistance of change. The success of
turnaround it seems that explicit in the case and Nissan organizational culture seems to be an
inevitable resistance of change. Employees of Nissan embrace restructuring. In this latter
criterion has to evaluate because this is required for the employees to find an new way of
thinking which is going to carry on strategic changes with Ghosn departs. Further the approach
that has been used by Ghosn to making Nissan to gain success and has helped it in strategy
execution with its both negative and positive aspect.
Culture with resistance to change
The Japanese model has been doing business and a very long and difficult history of
bureaucratic Keiretsus which have lead to an stagnation within the economy because if little
motivation for change and dramatic restriction. This has proven to be inevitable for changing and
can be identified Nissan because of the organization has allowed itself to incur loss for an decade
with gaining radicands (Fernandes, 2019). This has resulted over Nissans management to be
focused upon short-term market share and rather than a profitability. Only four models of
organization have gained profit. Instead of paying attention over customer’s preference it has to
be focused upon keeping an wisdom of Japan and also the custom of Keiretsu investment.
Further an awareness of conscientiousness for a organization that has been pointed fingers and
avoided responsibility. A problem that can be occurred in Nissan which has different in
department always has to blame within a department believing to be functioning perfectly.
Nissan has to identify over suffering severe within the disadvantage upon an inevitable resistance
to a change. Such employees in Nissan has to be avoided which is going to cause dissonance
because it is going to hurt their personal career growth. The corporate culture ended up creating

disadvantages like delaying the company’s decision-making. Also hindering of risk taking is very
much important at all levels, age and experience that has to be determined. Employee’s career path of
an organization has to be obviously focused upon bringing of new talent and fresh thinking.
Although, this created a critical situation for Nissan, the need for change was not urgent, due to
potential bailout by the government of Japan. Under normal circumstances, management is left to its
own devices, but in times of crisis the government of Japan steps in and leads a rescue operation and
takes charge of the restructuring. This illustrates how both the organizational and national culture in
Japan became a disadvantage and created resistance to change in Nissan. An essential aspect of
Carlos Ghosn approach was his awareness of the differences between the Japanese ways of doing
business opposite to the western style of doing business. Ghosn came to Japan without knowing
much about the country, which made him approach his new environment with an open mind,
accepting and building on the strengths of the two cultures. His style was to learn about the culture
by listening to the employees, and thereby he didn’t appear pre-judicial towards the culture. Ghosn
was well aware about the danger of imposing his western culture on to the employees. Therefore he
started to personally communicate with the different layers in the organization, which left the
employees feeling heard and respected. A management style with attention to the opinions and voices
of the employees was something the Nissan employees never had experienced before. This was far
away from the tall bureaucratic organizational structure, with little communication between the
layers. Ghosn brought with him three management principles, which created focus on new elements
in Nissans organization. With the need for an urgent change and a gained respect between the
western and the Japanese culture they therefore embraced Ghosn’s new management principles.
Approaching with respect Based on the above-mentioned factors Ghosn’s leadership style
therefore became one of his greatest advantages. He managed to give an impression of him being a
fellow employee instead of a manager on the top of the hierarchy (Fenik, Noble and Lehnert, 2020).
Ghosh’s focus was to build a relationship with employees from all layers in the organization, and
through this approach he managed to see problems and opportunities early in the process. Measured
by the speed of the acceptance and participation of the employees to the change, this shows how
Ghosn managed to enlist support from all levels at an early stage. It has also been clear confirmation
of trust, due to the importance of trust in the Japanese culture as an element for cooperation. The
focus on engagement is evaluated to be an advantageous way to approach the resistance to change in
the organization. Ghosn certainly did something right from the very beginning by interviewing the

different layers of the organization as a basis for his turnaround of the company. It was an
advantageous move to put the employees and their opinions in focus, and thereby creating an in-
house foundation for change.
Nissans restructuring
In the context of success, one essential aspect to his support within the organization was the Japanese
cultures respect towards leadership. Ghosn states in the case, “the Japanese are so organized and
know how to make the best of things”, which illustrates how the culture actually became a helper and
a great advantage in the implementation of the new strategy. This “making the best of things”
mentality and great respect towards leadership is evaluated to have helped Ghosn to effectively start
implementing the new reforms. An argument that supports the fact that Ghosn might have succeeded
earlier is the importance of efficient decision-making for Nissan as a global competitor. A turnaround
would probably turn out to be critical for Nissans future growth and profitability no matter what. The
Japanese way of organizing business is some how a hinder for companies in keeping up with the
global competition, and undermine the company’s competitiveness. The implemented efficient
decision-making approach could therefore be an essential element in Nissans long-term
sustainability, due to its strategy execution becoming more professional in a challenging and highly
shifting global market. However, the timing of the new strategy implementation could not have been
better. With the Asian crisis blooming, and the government of Japan not bailing out a major Japanese
institution, the Nissan organizations resistance to change got a real eye-opener. It is therefore believe
that the high motivation for change in Nissans organizational culture would not have existed before
this incident occurred. This explains the surprisingly quick acceptance and participation in the
change process that Ghosn introduced (Claxton, Nottage and Williams, 2019).
Perspective the strategy execution lead by Ghosn can only be characterized as a success. Ghosn
has illustrated that what really works to become a winner is to create a structure that reduces
bureaucracy, having a culture that inspire the workers to do their best, and constructing a
operational execution that deliver products that satisfy customers . Although, if we look at the
strategy success in a more long-term perspective, Ghosn’s advantageous leadership style don’t
seem that sustainable when it comes to the longer-serving employees. When looking at the
evaluation criteria culture, style of leadership and resistance to change Ghosn have managed to
make them advantageous on a short-term basis. But with the new reforms in swing there are

grounds for doubting Ghosn’s sustained commitment to the cultural respect. The promotion of
younger leaders over longer serving employees is a potential source of resistance to change.
Ghosn saw the new reform as a great opportunity for the younger leaders to get some experience,
but oversaw the cooperation difficulties that the older employees had with this matter. Knowing
that most of the top management with power in Nissan is longer-serving employees, this is a
crucial element in the decision-making when executing a reform so culturally conflicting. The
potential of having higher-level managers turning their back against Ghosn is not optimal for the
sustainability of the strategy. In this context, the resistance to change can again appear as a
powerful mechanism in the future of the company. For the turnaround to succeed in the long
run Ghosn needs buy-in from all employees in the organization. I therefore see it as essential
to use the cooperation problems as an advantageous feedback to also focus on serving the
interest of the longer-serving leaders. Ghosn should therefore implement a knowledge-team
with the longer-serving skilled leaders, for the younger-serving leaders to seek inspiration
from in challenging tasks.
Analysis of the 2015 Olympus accounting scandal and whether Japanese securities
laws functioned effectively to protect investors
The Olympus scandal was stared in the year of 2011 when British born Michael
Woodford has been suddenly ousted as the chief executive of international equipment which was
being manufactured by Olympus Corporation. He has been on this post for six months and two
weeks. Also has been made Chief executive officer at the time he exposed one of the biggest and
longest running loss hiding arrangements in the corporate history of Japan. The boards Chairman
Tsuyoshi Kikukwa has appointed Woodford and has brought a position that has helped in
gaining assume the title of CEO and president. This incident raised a concern about endurance of
tobashi schemes and the strength of corporate governance in Japan. Apparently irregular
payment has to be done for acquisition this has resulted into very significant asset impairment
charges has been made over companies account and Japanese financial magazine FACTA had

come to Woodford’s attention. Japanese press speculated on a connection to Yakuza. Olympus
defended itself against allegations of impropriety (Bender, Berrebi-Hoffmann and Reigné, 2019).
Despite Olympus denied over the matter quickly brought under the eyes of corporate corruption
scandal over concealment of more than 117.7 billion yen($ 1.5 billion) of investment losses and
other dubious fees and other payments which were done in the late 1980s and suspicion of covert
payments to criminal organizations. On 26 October Kikukawa has been replaced by Shuichi
Takayam as chairman, president and CEO. On 8th November 2011, the organization has admitted
that companies counting practices has been inappropriate and that money has been utilized for
the purpose of covering an inappropriate accounting upon former president Tsuyoshi Kikukawa,
auditor Hideo Yamada and executive vice-president Hisahi Mori. By 2012 the scandal had been
develop into one of the biggest and longest lived loss concealing financial scandal in history.
Due to this, 75-80% of the company’s stock market value has decreased. This lead to resignation
of a much broader, investigation all over Japan, UK and US, arrest of 11 both past and present
director, senior manager, auditors and also concern over Japan’s prevailing corporate governance
and transparency has been lost. Also it was found that bankers of Olympus were alleged
criminals. Wood ford received a report of ten million diet in damage from Olympus for
defamation and wrongful decision. Also 40 percent of companies 30 manufacturing plant by
2015.
CONCLUSION
From the above file it can be concluded that an laws are very important to run an country
specially in terms of trade and security. In the very first part law of insider has been explained
and also comparison has been done through J-SOX between Japan and US. In the second part its
has been explained that hoe Nissan has chosen to grow itself out of the circumstances that has
been faced by it and role of Ghosn has helped in it. in the end Olympus company scandal has
been explained.

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