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The stock scandal embroiling the Seibu group was exacerbated Wednesday when its Shizuoka-based railway company said it had been filing false share-ownership reports with authorities for three decades.

Izuhakone Railway Co. said stakes claimed to be owned by some 400 individual investors had actually been held by Seibu group companies, and that the deception was designed to make the number of investors look bigger on paper.

The Tokyo Stock Exchange, on whose second section Izuhakone Railway is listed, has assigned the firm’s shares to the monitoring post to warn investors of a possible delisting.

Izuhakone President Teruni Serizawa told a news conference Wednesday he will step down to take responsibility after the company completes its investigation into the case.

The firm’s announcement was the latest in the scandal engulfing the Seibu group, known for its secretive reputation.

Earlier this month, Kokudo Co., the group’s controlling entity, said it had actually held a bigger stake in Seibu Railway Co. than it reported to authorities.

The move was apparently aimed at keeping Seibu Railway on the TSE, which bars high concentrations of share ownership among a small number of investors.

The problem took a turn for the worse when it came to light that Kokudo tried to offload some of its stake in Seibu Railway to keep the railway firm from being delisted, before it announced the transgression.

Kokudo allegedly did not notify buyers, including the country’s blue chip companies, of potentially damaging information.

After the announcement of the share-ownership problem, Seibu Railway shares plunged, incurring massive losses to these buyers, some of which demanded compensation from Kokudo.

The incident has prompted regulatory authorities to begin probing for potential insider trading, which is prohibited by the Exchange and Securities Law.

Izuhakone Railway, 48.2 percent owned by Seibu Railway, said its problem came to light after an in-house probe was conducted after the Seibu scandal broke.

The company claimed the problem was not connected with that of Seibu Railway and the false reporting had been conducted independently for 30 years.

The firm also denied any involvement of the Seibu group patriarch, Yoshiaki Tsutsumi, who was also chairman of Izuhakone Railway before he gave up all his posts in the group, including chairman of Kokudo, earlier this month.

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