Financial authorities are investigating a former executive officer of advertising agency Asatsu-DK Inc. for alleged insider trading and have raided related locations, financial market sources said Friday.

In October last year, U.S. investment fund Bain Capital announced a ¥150 billion ($1.3 billion) tender offer to purchase Japan's third-largest advertising agency, which was seeking to delist and undergo a restructuring.

The former executive is believed to have leaked information about the tender offer before it was publicly announced, and the executive's acquaintance traded the company's shares based on that information, according to the sources.

The offer price was set at ¥3,660 per share, about 20 percent higher than the average closing price of the shares in the three months before the announcement.

Acknowledging the ongoing probe of the former executive, an Asatsu-DK corporate communications official said the company will fully cooperate with the investigation.