* SESC says to impose $184,500 fine against First New York
* Marks first penalty against overseas fund in insider probe
* Japan watchdog coordinated with U.S. SEC in the case
By Nathan Layne and Noriyuki Hirata
TOKYO, June 8 Japan's securities regulator said
on Friday it had recommended a fine of more than $180,000
against First New York Securities for insider trading in a 2010
public share offering by Tokyo Electric Power Co.
The penalty proposed to the Financial Services Agency is the
first against an overseas fund since the Securities and Exchange
Surveillance Commission (SESC) launched a series of probes in
2010 to stamp out insider trading ahead of public share sales.
"Overseas investors count for a large portion of the
Japanese market, they are an important component of the market.
But when there is unfair trading in the market as regulator we
can and will work to punish that behaviour," an SESC official,
who asked not be identified, told a news conference.
The Japanese securities watchdog said it had worked with the
U.S. Securities and Exchange Commission (SEC) on First New
York's case, although the official declined to say exactly when
they began cooperating.
JP Morgan & Chase is the only other foreign entity that has
been implicated in the insider trading investigation so far.
Investigators found that a JP Morgan salesman leaked information
on a 2010 share offering by Nippon Sheet Glass to a
Tokyo-based fund, sources have said.
JP Morgan, which has not been named as a target of
investigation and may not face penalties, has said Japanese
regulators had not found any "organizational" involvement in the
The securities watchdog has recommended First New York be
slapped with a penalty of 14.68 million yen ($184,500).
CONTROVERSIAL SHARE SALE
The Tokyo Electric share offering, announced in September
2010, was controversial even at the time, with some analysts
suggesting that a sharp sell-off in its shares suggested insider
Shares in the utility, which is now being nationalised as a
result of the high costs of cleaning up after last year's
Fukushima nuclear disaster, fell almost 13 percent in the two
weeks before the share offering was announced.
Tepco raised $5.8 billion in the deal to finance investment
in nuclear power and expansion plans in overseas gas and nuclear
The penalty on First New York was more serious than other
cases as the U.S.-based proprietary trading firm traded on its
own account, while other cases involved trading on behalf of
In one recent case, a Sumitomo Mitsui unit was fined 50,000
yen for an insider trading infraction.
The latest case also mark the third time Japan's top
investment bank Nomura Holdings has been linked to the
insider trading probe.
The SESC did not identify Nomura, but said an employee of
the underwriter was the source of the leak, using a consultant
firm. Nomura was the lead underwriter on the Tokyo Electric
First New York Securities could not be reached for comment.
A Nomura spokeswoman said it continued to cooperate with the
SESC in its investigation.
Last week, Nomura replaced the head of institutional sales
at its core securities unit. A source with knowledge of the
matter said Kenichi Ishitomi had been asked to relinquish his
post to focus on cooperating with the SESC probe.