It is reported from Tokyo that the Securities and Exchange Surveillance Commission (SESC) in Japan is expected to file an unprecedented criminal complaint with the Osaka District Public Prosecutors against the Osaka Securities Exchange (OSE) alleging market manipulation by a former senior executive.
The criminal charges are expected to be filed against the former vice president of the OSE and the president of Japan Electronic Securities Co., a former OSE affiliate, and concern false trades. Indictments will follow. Sources close to the case suggest the two men conducted a phantom trade scheme in which offsetting buy and sell orders in individual stock options were issued simultaneously to inflate the OSE’s stock options market, making it appear more active than the Tokyo Stock Exchange.
According to Japan’s Securities and Exchange Law, if a legal representative or an employee of a corporation that is found guilty of market manipulation or other criminal acts, then the corporation itself is potentially liable for a fine of up to 500 million yen. “From a regulatory perspective, this sends a very strong message that unfair market practice or operations will not be tolerated,” says a spokesman for Mizuho Corporate Bank in Tokyo.