The securities watchdog has been probing the possibility of insider trading related to Livedoor Co.’s takeover of a used automobile dealer, sources said Saturday.
The share price of Jac Holdings Co. experienced sharp gains in abnormally large transactions on the second section of the Tokyo Stock Exchange on Aug. 25, before Livedoor announced after that day’s trading that it intended to acquire the company, according to the sources.
The TSE reported its findings about the “unnatural” transactions to the Securities and Exchange Surveillance Commission, they said.
The SESC, which has been investigating cases related to Livedoor, is looking into the deals as a case of suspected insider trading, the sources said.
Jac Holdings has since been renamed Livedoor Auto Co.
Shortly after 6 p.m. Aug. 25, Livedoor announced it would make Jac Holdings an affiliate by acquiring the company’s outstanding and new shares.
During trading that day, some 24.3 million shares of Jac Holdings traded hands, more than 13 times the volume the previous day.
The price of Jac Holdings rose sharply that day to 156 yen, up 21 yen from the day before.
The TSE soon thereafter launched an investigation, including questioning officials of securities houses, the sources said.
As a result, it has come to suspect that somebody who knew Livedoor would announce the deal later that day placed massive buy orders for Jac Holdings shares, they said.
It reported the findings to the securities watchdog, which is looking into the case along with the securities exchange law violation case for which former Livedoor President Takafumi Horie has been arrested, they said.
At that time, Horie was preparing to run in the Sept. 11 general election as an independent with support from senior members of the ruling Liberal Democratic Party.
Horie stepped down completely from the management of the Livedoor group Wednesday after he was arrested Monday on suspicion of disclosing falsified financial information in 2004 in violation of the securities exchange law.
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