Mizuho Financial Group¡¯s brokerage unit said it is under investigation by Japan¡¯s financial watchdog, after the Nikkei newspaper reported its staff are suspected of insider trading.
The employees under suspicion by the Securities and Exchange Surveillance Commission are from the investment banking division, the newspaper reported, without saying where it got the information.
Mizuho Securities said in a statement that it¡¯s fully cooperating with the probe and can¡¯t comment further because the investigation is ongoing. A representative for the SESC declined to comment.
The revelations are the latest to potentially undermine confidence in Japan¡¯s financial industry at a time when the stock market is booming. Local equities are trading near a record and investment banks are benefiting from a resurgence in stock offerings and mergers and acquisitions.
Mizuho, Japan¡¯s third-biggest bank, has been expanding its investment banking business at home and abroad to diversify revenue sources. Its shares fell 5.3% on Monday, the most since April, as lenders slid after slower-than-expected economic growth dampened bets for the Bank of Japan to raise interest rates.
There have been a series of insider trading cases in Japan in recent years involving employees across the financial industry.
Tokyo prosecutors arrested a former senior executive at a small brokerage, Mita Securities, earlier this month on suspicion of insider trading involving Nidec¡¯s unsolicited tender offer for machine tool maker Makino Milling Machine.
In November 2024, Sumitomo Mitsui Trust Group said it fired a manager who was suspected of insider trading. The following month, the SESC filed a complaint against a former employee of the Tokyo Stock Exchange who was dismissed under similar allegations. Last March, a Tokyo court found a former judge guilty of trading on confidential information while working at the Financial Services Agency, which oversees the SESC.
Further back in 2012, a regulatory crackdown revealed that staff at several major brokerages leaked information on a series of equity offerings that was used by traders. Nomura Holdings¡¯ chief executive officer at the time resigned after the company acknowledged employees gave tips on share sales it managed.
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