Bloomberg News

JICA to Ask Underwriter SMBC Nikko About Insider-Trading Probe

October 06, 2011

Oct. 6 (Bloomberg) -- Japan International Cooperation Agency, a government body providing development assistance, said it asked SMBC Nikko Securities Inc., the lead underwriter for its bond sale, to explain its insider-trading probe.

JICA, as the agency is known, will invite bankers from SMBC Nikko as early as this week to account for the investigation by Japan’s securities watchdog over possible insider-trading violation, said Yoshifumi Omura, director of capital markets division at the Tokyo-based body. The decision on whether to exclude the brokerage as an underwriter for its 20 billion yen ($261 million) bond sale in December will be made based on the findings, he said.

“We are now examining the situation,” Omura said today in an interview in Tokyo. “We are not making any decisions until we conduct some hearings.”

JICA has hired SMBC Nikko, Daiwa Securities Group Inc. and Mitsubishi UFJ Morgan Stanley Securities Co. to underwrite the planned bond sale for individual investors.

SMBC Nikko is being investigated by Japan’s Securities and Exchange Surveillance Commission for a possible insider trading violation by an executive, the brokerage said in an e-mailed statement. The executive allegedly told an acquaintance that management of Enoteca Co., a Japanese wine importer, was preparing to buy the company’s shares through a tender offer, the Asahi newspaper reported earlier today, without saying where it got the information. The acquaintance traded the stock before the management buyout was announced, the newspaper said.

Nissan Financial Services Co., a financial unit of Nissan Motor Co., today dropped SMBC Nikko from a planned bond sale, according to a statement from Mitsubishi UFJ Morgan Stanley. The statement didn’t elaborate on the reason for the exclusion. Mitsubishi UFJ, Citigroup Inc. and Goldman Sachs Group Inc. will still manage the next sale, the statement said.

--Editors: Tomoko Yamazaki, Linus Chua

To contact the reporters on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net; Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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