Japan's Regulators Get Tough

With a series of crackdowns on stock manipulation, fraud and other forms of malfeasance, Japan's Financial Services Agency (FSA) has gotten tougher on corporate crime. But its latest ruling is a jaw-dropper: on May 10, the FSA announced it was suspending most operations at ChuoAoyama Pricewaterhouse Coopers, one of Japan's largest auditing firms, for two months, due to its failure to prevent accounting fraud at client company Kanebo, a textile and cosmetics firm since broken up in a government-led restructuring.

The suspension is the first ever imposed on a major Japanese accounting firm, and raises questions about ChuoAoyama's...