The Securities and Exchange Surveillance Commission of Japan has decided to file a criminal complaint against the Osaka Securities Exchange (OSE) over alleged market manipulation, a news report said yesterday.
The unprecedented criminal complaint against a securities exchange, to be filed with the Osaka District Public Prosecutors Office, centers on alleged market manipulation orchestrated by a former senior executive of the exchange, the Nihon Keizai Shimbun said, citing sources familiar with the matter.
Under Japan's Securities and Exchange Law, if a representative or employee of a corporation is guilty of market manipulation or other criminal acts, the corporation is potentially subject to a fine of up to ?500 million (US$4.17 million), the newspaper said.
Also named in the criminal complaint will be Takuo Noguchi, the former vice president of the OSE who allegedly directed a series of false trades; Japan Electronic Securities Co, which at the time of the market manipulation was an OSE affiliate; and Nobuo Araki, the president of Japan Electronic Securities, the newspaper said.
Osaka prosecutors planned to indict Noguchi as early as yesterday, though they will hold off from indicting the OSE, Japan Electronic Securities and Araki for the time being, the Nihon Keizai said.
Noguchi and others apparently planned a false trading scheme aimed at making the OSE's stock options market appear more active than the same market run by the rival Tokyo Stock Exchange, the newspaper said.
It is believed that sham trades, in which offsetting buy and sell orders in individual stock options were issued simultaneously, were conducted on about 110,000 occasions in the period from December 1998 through March 2000, it said.
The SESC, working with Osaka prosecutors, conducted an investigation last month and concluded that the scandal went beyond the criminal actions of individuals to encompass the OSE as an organization, it said.