The Securities and Exchange Surveillance Commission filed a criminal accusation with prosecutors March 20 against Yamaichi Securities Co. and three of its former executives for allegedly falsifying financial statements.
Investigations by the SESC showed that the brokerage, former Chairman Tsugio Yukihira, former President Atsuo Miki and former Vice President Ryuji Shirai violated the Securities and Exchange Law by submitting false financial statements for fiscal 1995 through 1997. The three were arrested earlier this month on the charges.
According to documents filed with the Tokyo District Public Prosecutor's Office, the former executives were responsible for ordering billions of yen worth of debts incurred by Yamaichi through "tobashi" deals to be moved off its balance sheets from 1991 to 1992.
During the period in question, Yamaichi allegedly found itself stuck with securities with hidden losses from seven companies as it could find no other customer to purchase them, and chose to hide the losses through the use of paper companies and transactions of an overseas subsidiary. The losses, had they been properly reported, would have led to an additional 275 billion yen in losses for the firm as of the end of March 1997, according to SESC calculations.