The result of a Finance Ministry probe released Friday showed that another securities firm has been involved in "tobashi" transactions.
Yamaichi Securities Co., which went bankrupt late last month, admitted to conducting the illegal transactions when it went under.
Ministry officials said one regional brokerage has admitted to mediating a transaction involving securities with appraisal losses from one firm to another to prevent the losses from surfacing. The name of the securities company was not released because it did not offer compensation for any losses incurred in the transaction, which would have been a violation of the Securities and Exchange Law.
A tobashi transaction is one that involves the trading of securities with appraisal losses among companies with different business years so as to keep the losses from appearing in annual earnings reports. In many instances, however, a brokerage can be stuck with the securities if stock prices fail to recover and no purchaser can be found. If the broker has promised the client it will not suffer losses, then it is often called on to compensate.
Friday's findings came in response to a ministry order that all 289 brokerages operating in Japan submit written reports on the existence of such deals, which in Yamaichi's case led to a huge amount of off-balance sheet debts that accelerated its collapse.
A final decision on what action to be taken against the brokerage in question would be made by the Securities and Exchange Surveillance Commission, according to the ministry.