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Another Reason to Avoid Japanese Stocks: Street Whispers

But Panasonic is not alone in struggling to contain its earnings information, a piece of financial information that is considered sacred ground, even in a business press that celebrates and competes for leaked information on mergers, initial public offerings and management change from a usually anonymous cohort of corporate insiders, bankers and consultants.

Bloomberg obtained Nomura Holdings fourth quarter earnings roughly two days before they were set to be announced on April 27 and reported that trading gains had propelled the bank to a 50% increase in year-over-year net income to 18 billion yen, citing two unnamed sources. The news pushed Nomura shares nearly 2% higher, however, the sources also told Bloomberg that the earnings figure was 'preliminary' and could change when the company's board met later in the week.

When Nomura formally announced earnings later in the week, the company reported a fourth quarter profit of 22.1 billion yen, roughly a 23% higher than the Bloomberg report containing leaked figures.

Earnings leaks from anonymous sources are a step beyond the M&A and management leaks that cross trading screens daily. Breaking merger or corporate news, sourced anonymously, often partially reflects eventual facts because they are subject to quick change. With earnings, there is no need for such uncertainty.

Bloomberg has been able to get an early hold on the earnings of companies as large as Disney (DIS) in recent years by guessing a predictable URL for a release; however, corporations have now mostly plugged that hole.

In the case of Japan, the issue of actual leaks may be a symptom of a bigger worry for equity investors, even if economic woes cut sharply at markets in the past 20 years. Nomura, the largest brokerage in Japan, admitted on Tuesday to instances where it's employees leaked confidential initial public offering plans to investors and offered a revamp of its controls in an effort to stave off a stiff regulatory penalties.

"Nomura sincerely apologizes to our customers and all parties concerned for the trouble we have caused," said Nomura in a statement, which also noted that the bank would enhance its internal controls "to regain the trust of the public." In late July, Nomura replaced longtime chief executive Kenichi Watanabe with Koji Nagai, as the three-month probe into IPO leaks and insider trading hit a boiling point.

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