SMBC Nikko Securities Inc. disclosed Tuesday that the brokerage and its employees are under investigation by the Securities and Exchange Surveillance Commission over suspicious stock transactions.
The major brokerage admitted that the company and its staff are being probed by Japan’s securities watchdog, but declined to comment further.
“We will continue to cooperate fully with the SESC with respect to the investigation,” it said in a statement.
According to sources close to the matter, the regulator has searched the company’s headquarters on suspicion of alleged market manipulation through repeated transactions in certain individual stocks to prevent their share prices from falling.
The brokerage is suspected of illegitimately maintaining the price of stocks that were traded in transactions called “block offerings.” The securities market watchdog is currently looking into the matter, and could file a criminal complaint with public prosecutors.
According to the sources, the transactions in question involve securities firms that receive a high volume of sell orders from clients buying the stocks from those clients during off-hours trading and then finding buyers later.
The employees are believed to have used the system to prevent stock prices collapsing when large shareholders unloaded shares in bulk around 2020.
A fully-owned unit of Sumitomo Mitsui Financial Group Inc., SMBC Nikko Securities began operations in October 2009.
The brokerage firm currently has around 120 branches throughout Japan. It logged ¥357.9 billion in net operating revenue for the year that ended in March 2021.
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