• Kyodo

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Prosecutors are expected to indict a former vice president of the Osaka Securities Exchange this week in connection with a market manipulation scandal.

Investigative sources said Wednesday the move by the Osaka District Public Prosecutor’s Office stems from a formal complaint that the Securities and Exchange Surveillance Commission plans to file against Takuo Noguchi, 66, a former OSE official.

Noguchi will be indicted as early as Thursday but will not be arrested then, they added.

With this step, the OSE scandal — which led to criminal investigations and undermined public trust in the bourse — should come to an end.

The case against Noguchi, a former Finance Ministry bureaucrat, would mark the first time a charge of market manipulation has been applied to deceptive securities dealing.

Prosecutors also considered filing cases against the OSE itself and the Osaka-based Japan Electronic Securities Co., its affiliate at the time. They had to shelve the plans, however, because the OSE became a stock company in April 2001 and Japan Electronic Securities was sold.

Noguchi has been questioned by prosecutors for allegedly falsifying stock options deals between July 1997 and March 2000 to make OSE options trading appear to be drawing more participants than the Tokyo Stock Exchange.

The two markets started options trading of individual stocks simultaneously in 1997.

According to the sources, Noguchi is suspected of having used Japan Electronic Securities and another affiliate firm, which is now dissolved, from around December 1998 to March 2000 to repeatedly engage in fake stock transactions worth about 1.2 billion yen.

Prosecutors searched several locations June 20, including the OSE building and Noguchi’s home in Tokyo. He has admitted to most of the allegations.

Noguchi resigned from his position at the OSE in June 2000 after it was learned he had established affiliate companies without the approval of the bourse’s board of directors.

Last spring, the OSE filed a complaint with Osaka prosecutors against Noguchi on suspicion of breach of trust for causing damage to the exchange and its affiliates.