TOKYO (Reuters) - Japan’s securities watchdog recommended on Friday Japan Advisory be fined $1,500 for insider trading, the second penalty against the Tokyo hedge fund at the center of an industry-wide crackdown on insider dealings ahead of public share offerings in the country.
The Securities and Exchange Surveillance Commission (SESC) said it had recommended a fine of 120,000 yen ($1,500) against Japan Advisory for trading on inside information about a planned fundraising by chipmaker Elpida Memory ELPDF.PK in July 2011.
The SESC said Japan Advisory found out about the offering based on a research coverage list provided by one of the underwriters on the deal. Elpida’s name was removed from the list, a hint that an offering could be on the cards.
While the SESC did not name the underwriter, Nomura Holdings (8604.T) acknowledged that it was likely one of its employees had tipped off the hedge fund inadvertently through the provision of the research list with Elpida removed.
Nomura, which was implicated earlier this year for tipping off clients ahead of three public share offerings, said that it found that it may be involved in the latest Japan Advisory case through a voluntary internal investigation.
The SESC said it did not believe the Nomura employee involved had intentionally provided the hedge fund with inside information.
Japan Advisory could not be immediately reached for comment.
The latest case came after Japan Advisory did not show up for a hearing last month called after the hedge fund submitted an objection to the charges in the first case against it announced in June.
The first case against Japan Advisory had garnered considerable media attention because of the large influence regulators believe the hedge fund and its chief, Edward Brogan, held over a wide swathe of the brokerage industry.
In August, the Financial Services Agency, which oversees the SESC and carries out fines and punishments based on the SESC’s recommendations, ordered all major underwriters operating in Tokyo to report back on their dealings with Japan Advisory, which the financial regulators suspect of paying outsized commissions in return for inside information.
Reporting by Nathan Layne; Editing by Michael Watson and Muralikumar Anantharaman