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To: long-gone who wrote (23780)	12/3/1998 7:54:00 AM
From: lorne	Read Replies (1) \| Respond to of 116762

Manipulation by rumors seen at TSE Dec.3, 1998 Yomiuri Shimbun The nation's securities watchdog body suspects a number of brokerages, including some foreign-based ones, were involved in transactions where rumors were allegedly used to manipulate the prices of about 130 shares on the Tokyo Stock Exchange during September and October, informed sources revealed on Wednesday. The Securities and Exchange Surveillance Commission reportedly believes that, if true, the actions would be a "vicious" violation of the Securities and Exchange Law. Using rumors to manipulate share prices is prohibited under the law and is punishable by up to five years in prison or a maximum fine of 5 million yen. It is not the first time rumors have been suspected of being used to influence stock prices. One circulated in November of last year--that the managements of general trading houses Tomen Corp. and Daiwa Securities Co. had been plunged into crisis after the failure of Yamaichi Securities Co.--caused buying orders for shares in financial institutions to shoot up on the exchange. In the year between July of last year and June, the commission investigated unusual movements in the shares of 27 firms for violations of the securities law. According to the sources, questionable trading practices increased sharply around October, when the government decided to put the Long-Term Credit Bank of Japan under state control. A number of shares began trading in abnormal volumes over short periods of time and some quickly plunged in value, they said. Of the 130 firms whose shares are suspected of having been manipulated, 70 are financial organizations, while the other 60 include major construction firms and trading houses. During their investigation, the commission reportedly examined more than 300 securities firms that had brokered large-volume transactions, either on their own or at the request of clients. About a half of the firms questioned were foreign-based, the sources said. All the firms were asked to turn over a list of the clients who had placed the large orders. Most of the foreign brokerages, however, reportedly told investigators that they did not know the identities of their clients since many of the transactions were ordered by their parent firms, mostly in the United States. According to the sources, some foreign firms pointed out to the commission that its powers are limited to domestic affairs and that they had no obligation--and no intention--of handing over the names of their overseas clients. That spurred the commission to send Funabashi and two other high-ranking officials to ask the U.S. commission to look for firms that had recently conducted heavy trading on the Tokyo Exchange. However, the expected U.S. findings could not be used in criminal proceedings against the brokerages in Japan, the sources said. The commission also now plans to beef up its investigation teams to deal with the flood of questionable deals, they said.