OSAKA – The Osaka Securities Exchange on Friday filed a 520 million yen damages suit against two former executives over their involvement in illegal stock trading.
The lawsuit was lodged with the Osaka District Court.
The bourse is seeking compensation from Kyoji Kitamura, former OSE president, and Takuo Noguchi, former OSE vice president.
The latter was indicted in July for allegedly falsifying stock option deals between 1998 and 2000.
According to the suit, 66-year-old Noguchi faked transactions through Japan Electronic Securities Co., which he set up in November 1998 to make OSE options trading appear to be attracting a great number of participants.
Apart from running up 110 million yen in losses from sales of Japan Electronic Securities stocks, Noguchi used 96 million yen in OSE funds to cover up the fake transactions, the suit says.
The suit also claims that the OSE incurred further losses of some 260 million yen from trading losses and fees resulting from illegal transactions involving another affiliated firm.
In addition, the OSE took a financial hit of at least 50 million yen due to a loss of credibility, the suit says.
The OSE said it decided to include 70-year-old Kitamura in the suit as it is thought that he must have known of the false transactions but failed to take any action to stop them.
After filing the suit, an OSE official told a news conference that the bourse may file more suits against the two as it believes the former executives have caused it to lose a total of 3.8 billion yen.
Meanwhile, Noguchi said, “I cannot make any comment as I have not been informed yet of the lawsuit.”
Noguchi, a former Finance Ministry bureaucrat, was indicted in July by the Osaka District Public Prosecutor’s Office without being taken into custody.
He is suspected of market manipulation in violation of the Securities and Exchange Law.
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