Tokyo Exchange Turns Over Trading Probe to Watchdog

The Tokyo Stock Exchange has passed its inspections of possible insider trading to the Financial Services Agency, Atsushi Saito, president of the bourse said.

The exchange has received complaints from long-term stock investors in Europe about trading irregularities of companies that announced capital raising plans in Japan, Saito said at the Europlace Financial Forum in Tokyo today. The bourse has looked into it and now the investigation has been handed over to the government authorities, he said.

“We don’t have legal inspection power, but we are working with the government,” said Saito. “The inspection itself has already been passed over to the government and the FSA.”

The exchange began investigating suspicious trading of shares that fell before companies announced capital-raising plans, Naoya Takahashi, a spokesman at the TSE said on Oct. 29. Tokyo Electric Power Co. and Inpex Corp. are among companies whose shares plunged before stock-sale announcements or pricing this year.

The bourse will urge regulators to shorten the time between a company’s announcement and pricing of share sales, Saito said in an interview on Nov. 18. In Japan, there is a time-lag of weeks from the sale announcement to the share pricing, compared with several hours in the U.K., Saito said. Japanese regulators are studying whether to revise rules to implement stricter oversight on trading before and during share sales.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Kotaro Tsunetomi in Tokyo at ktsunetomi@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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