Japan’s insider trading probe hits JP Morgan
JAPAN’S widening probe of insider trading reached JP Morgan Chase’s door yesterday as the embattled US bank was identified as the source of leaked confidential information regarding a planned share offering by Nippon Sheet Glass.
Three people with knowledge of the probe said officials had determined that a JP Morgan salesman had been the source of the leak about the offering to a Tokyo-based fund, Asuka Asset Management.
The development marks the first time a foreign bank has been caught up in an investigation by Japanese officials that has put the spotlight on what insiders and regulators say had become a near-endemic practice in the Tokyo market.
There is no indication JP Morgan will face any penalty in Japan. Insider trading fines, even when imposed by Japanese regulators, tend to be token – for example, yesterday’s ¥80,000 (£644) fine for Sumitomo Mitsui Trust Bank yesterday for insider trading linked to a share sale in 2010.
Even so, the revelation of JP Morgan’s involvement in the probe could raise new questions about the internal controls of a Wall Street bank already under scrutiny after reporting a trading loss of at least $2bn in the “London Whale”case.
The bank yesterday sold an estimated $25bn in profitable securities in an effort to prop up its earnings in the wake of the hedging strategy that went awry.
JP Morgan, one of two lead underwriters for the Nippon Sheet Glass stock sale, said it had not been accused of any “organisational” involvement in insider trading.