A JPMorgan Chase & Co. (JPM) employee in Japan was found to have leaked insider information connected to Nippon Sheet Glass Co.’s 2010 share sale, according to two people with knowledge of the situation.
The people, who declined to provide any additional details, asked not to be identified as the matter is confidential. Asuka Asset Management Co. was told about the non-public information from one of the lead underwriters for Nippon Sheet’s equity offering, Japan’s Securities and Exchange Surveillance Commission said yesterday.
Japanese regulators have been probing trades tied to stock offerings in response to criticism that leaks on financing plans are eroding investor confidence. The investigation comes to light less than three weeks after JPMorgan disclosed losses of at least $2 billion at its London unit due to bets on illiquid credit derivatives, causing its shares to fall 17 percent.
JPMorgan said it’s “cooperating fully” with the authorities on the matter, without confirming that an employee was involved.
The bank “has not received any indication from the authorities that suggests J.P. Morgan’s involvement either by the company as a whole, or by any department as a whole,” it said in a statement on its website following the SESC’s announcement. “We take this matter extremely seriously and will continue to take measures to enhance our internal control.”
Daiwa Securities Group Inc., Japan’s second-largest brokerage, and New York-based JPMorgan were the two joint global coordinators on the deal, the watchdog said yesterday at a press conference in Tokyo. The SESC officials declined to comment on whether JPMorgan was the source of the leaked information.
Daiwa wasn’t involved in the insider-trading activity, Akihiro Honda, a Tokyo-based spokesman for the Japanese brokerage, said yesterday.
The SESC recommended that the Financial Services Agency impose a 130,000 yen ($1,600) fine against Tokyo-based Asuka Asset Management.
Separately, it also recommended an 80,000 yen fine for Chuo Mitsui Asset Trust & Banking Co., a unit of Sumitomo Mitsui Trust Holdings Inc. (8309), related to a Mizuho Financial Group Inc. (8411) stock sale.
Underwriters for the Mizuho deal included Mizuho Securities Co., Nomura Holdings Inc. (8604), JPMorgan and Bank of America Corp.’s Merrill Lynch, it said.
JPMorgan shares rose 0.4 percent to $33.63 in New York trading yesterday. Daiwa declined 2.3 percent to 250 yen at 12:45 p.m. in Tokyo. Sumitomo Mitsui Trust dropped 2.4 percent to 202 yen. The benchmark Topix index lost 1.1 percent.
The latest penalty recommendation for Chuo Mitsui is its second since March, when it was fined 50,000 yen for using information obtained by an underwriter in trades tied to Inpex Corp. (1605)’s 2010 share offer.
Nomura, one of the lead underwriters for the Inpex shares, was involved in an insider-trading case connected to that equity offering, a person with knowledge of the matter said at the time of the fine recommendation.
Following yesterday’s action against Chuo Mitsui, Nomura said in a statement that it “will continue to cooperate fully in the ongoing inspection” of the brokerage.
Nomura, Japan’s largest investment bank, also said it has hired outside attorneys to conduct an investigation of the company and to advise the firm on improvement measures and disciplinary actions based on their findings.
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