Sumitomo Mitsui Financial Group’s brokerage unit said Saturday it is investigating after some of its executives were arrested over alleged market manipulation, Reuters reported Saturday.
On Friday, Tokyo prosecutors had four executives at SMBC Nikko Securities, including a senior managing executive officer, the Reuters report said, noting the company only released titles, not names.
The arrests were related to «block offers,» or after-hours large-volume trades which allow investors to unload shares without creating a negative price impact, the report said.
Proprietary Trading
SMBC Nikko is under suspicion of having bought the stocks on the market via proprietary trading, which might have been aimed at preventing closing share prices from falling below levels where block-offer investors were willing to sell, Reuters reported.
CEO Yuichiro Kondo said the brokerage suspended block offer transactions, which account for around 5 percent of annual trading revenue, Reuters reported.
Bloomberg reported Kondo indicated the company could be subject to disciplinary action. That followed a raid Friday of the brokerage’s Tokyo headquarters by prosecutors, which capped months of investigations by Japanese authorities, the Bloomberg report said.
