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MARKETS Japan probing brokerages on leaks to advisory firm

Banking regulator asked a dozen securities firms to check whether they leaked information to hedge fund adviser Japan Advisory

Bloomberg
July 7, 2012

Tokyo Japan's banking regulator asked a dozen securities firms to check whether they leaked information to hedge fund adviser Japan Advisory, as part of a government probe into insider trading.

The Financial Services Agency made the request this week as part of its call on the 12 brokerages including Nomura Holdings and Goldman Sachs to review how they handle private information, Financial Services Minister Tadahiro Matsushita said at a news conference in Tokyo on Friday.

The FSA suspects Japan Advisory sought information from brokerages on forthcoming share sales in exchange for high commissions, the Nikkei newspaper reported on Friday, without attribution. Japan is attempting to restore confidence in the country's financial markets by cracking down on short-selling based on tips from underwriters of public offerings.

Japan Advisory had its business registration revoked on June 29 after the securities watchdog found that it used non- public information to trade Nippon Sheet Glass Co. shares before the glassmaker's offering in 2010. An employee of Daiwa Securities Group, which managed the issuance, tipped an overseas hedge fund on the sale, two people with knowledge of the matter said last week.

Nomura, Japan's biggest brokerage, said last week that it cut top executives' pay and suspended some businesses after acknowledging that employees provided leaks ahead of three share issuances in 2010. The scandal prompted state-run Development Bank of Japan to drop Nomura as a lead underwriter of its bond sale.

Calls to spokesmen at Daiwa and Nomura weren't immediately returned. Hiroko Matsumoto, a spokeswoman for Goldman Sachs in Tokyo, declined to comment. Edward Brogan, head of Japan Advisory, didn't immediately reply to an e-mail or answer phone calls.

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