Japan’s securities watchdog is examining possible insider trading of All Nippon Airways Co. (9202) shares before last week’s announcement of a public offering, a government official with direct knowledge of the matter said.
The Securities and Exchange Surveillance Commission is studying share movements before the July 3 announcement and will conduct hearings to determine whether underwriters leaked information, said the official, who requested anonymity as the investigation is private.
Japanese regulators are cracking down on insider trading after finding that employees of firms including Nomura Holdings Inc. (8604) tipped off clients about share sales they managed in 2010. Moody’s Investors Service said such leaks may be “more than a rare occurrence” and the loss of confidence from the scandal will damage local securities firms.
Trading volume of All Nippon Airways shares reached a three-month high the day before news of the 211 billion yen ($2.6 billion) issuance became public, led by short-selling, according to data compiled by Bloomberg. The moves were “unnatural,” ANA spokesman Ryosei Nomura said on July 6.
ANA’s Nomura said the airline currently has no plan to take action after receiving assurances from the four underwriters – Nomura Holdings, Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM) and Deutsche Bank AG (DBK) – that they didn’t leak information.
Spokesmen at the four banks declined to comment. An SESC spokesman who asked not to be named also declined to comment, saying he wasn’t authorised to discuss individual companies with the media. ANA spokeswoman Megumi Tezuka said the carrier is unaware of the regulator’s examination.
ANA, Japan’s biggest carrier, announced its share sale at 4 p.m. on July 3. Investors traded 24 million ANA shares on the previous day, the most since March 27, according to data compiled by Bloomberg. The stock declined as much as 2.7 percent on July 2 before closing 0.9 percent lower at 224 yen, while the benchmark Topix Index (TPX) dropped 0.1 percent.
Shares of ANA rose 2 percent to 201 yen at 10 a.m. in Tokyo. The Topix advanced 0.5 percent.
Financial Services minister Tadahiro Matsushita said today that his agency is determined to continue its insider-trading probe, without referring to specific cases. “There are some deep-rooted issues,” he said at a news conference in Tokyo.
The Financial Services Agency, which oversees the SESC, last week asked 12 brokerages including the four arrangers of ANA’s issuance to review how they handle private information.
The investigation is beginning to undermine underwriting business for Nomura, Japan’s largest brokerage, and its closest domestic rival Daiwa Securities Group Inc. (8601)
Nomura was dropped as a lead underwriter for state-owned Development Bank of Japan Inc.’s bond sale because of its involvement in leaking non-public information used for insider trading. The Japan Housing Finance Agency said yesterday it excluded Nomura from managing bond issuances.
Daiwa was omitted from a bond sale being conducted by Kawasaki Heavy Industries Ltd
“We expect a mounting loss of confidence from this scandal will have a lasting impact on all players in the Japanese market,” Moody’s said in a note yesterday. For local companies seeking advice on takeovers, the crackdown gives them “a reason to use international brokers that have not been implicated in the insider trading scandal,” the credit-rating company said.
Nomura said last month that it cut top executives’ pay and suspended some businesses after acknowledging that employees gave leaks ahead of three share issuances in 2010. The SESC is still inspecting the Tokyo-based firm.
Daiwa said last month that it will start an internal probe and strengthen controls after the SESC found that an employee of an unidentified brokerage leaked insider information on Nippon Sheet Glass Co.’s 2010 public offering.