TOKYO — Japanese regulators and executives of the Tokyo Electric Power Company are asking questions about a seemingly coordinated series of stock purchases two weeks ago that led to an undisclosed buyer or buyers acquiring a large block of the utility, which owns Japan’s dangerously damaged nuclear power plant.
Regulators want to know whether the trades, valued at up to $600 million and placed from Hong Kong during the week of April 3, were structured to circumvent Japanese securities laws, which require the owner of more than 5 percent of a publicly traded company to file disclosure papers identifying the shareholder.
Depending on the prices at which the buy orders were executed, they could add up to nearly 10 percent of Tepco’s shares.
The trading and the questions surrounding it were described by a senior executive of another company in an interview here. The executive insisted on anonymity to protect business and government connections.
Regulators are also making informal queries to determine whether the government of China or any other country might have used its sovereign wealth fund to finance the purchases, although they could have been made by hedge funds, the senior executive said.
“They’re really, really pushing, trying to figure out who it was,” the executive said of the regulators. “There’s somebody out there that holds a whale of a position, and structured the position in such a way that they don’t have to file” a mandatory disclosure.
Hiro Hasegawa, a spokesman at Tokyo Electric, widely known here as Tepco, declined to comment.
The trades were made during a period when the nuclear accident seemed to be threatening the company with financial disaster. Panicked investors were dumping Tepco’s shares, with as many as a fifth of the shares changing hands each day, at prices as low as 292 yen ($3.51) apiece Before the earthquake, shares of Tepco traded steadily at 2,100 yen ($25.25).
Now the worst of the crisis — after the March 11 earthquake and tsunami damaged the Fukushima Daiichi nuclear power plant — seems to have passed, although worries remain about the possibility of powerful aftershocks and another tsunami.
Hydrogen gas explosions have stopped occurring at the plant, a leak of highly radioactive water has been plugged and robots are starting to enter the reactor buildings to assess the potential for long-term repairs.
Government officials are talking about ways to help pay for the cleanup, including a sales tax or a national surcharge on electricity. Tepco’s shares have recovered in the last six trading sessions, closing at 467 yen ($5.61) a share in Tokyo in Monday.
So who was brave enough to buy Tepco’s shares when investors feared its damaged reactors could release a cloud of radiation toward Tokyo at any moment? That is what regulators and Tokyo Electric officials are trying to find out.
Hiroyuki Hara, an official at Japan’s Securities and Exchange Surveillance Commission, said the commission was unable to comment on specific cases or investigations. He said, however, that the commission had stepped up checks of market movements in the turmoil after the March 11 disaster, including any indications of market manipulation or insider trading. He declined to say whether any investigations had been opened.
Kazushi Sato, an official at the foreign currencies section at the Finance Ministry, said that an investigation would be started only if there were grounds to suspect that a foreign investor had pursued ownership totaling over 10 percent of a national security asset without telling Japanese financial authorities and gaining approval. Not doing so would violate Japanese law. He said he was not aware that such an investigation had been opened over Tokyo Electric shares.
An official at the international investment division of Japan’s Ministry of Economy, Trade and Industry, which oversees foreign investment in Japanese utilities, said he was not aware of an investigation into trading of Tokyo Electric shares.
When six bankers in Hong Kong and Tokyo were asked about the purchases, two said that they had heard about them but had no idea who was behind them. The other four said they had heard nothing about the transactions.
Trading records show that investors, fearful of Tepco’s liability from the accident at the Fukushima Daiichi plant, dumped hundreds of millions of Tepco’s shares in the week of April 3. Nearly a fifth of the entire company’s shares, worth $1.2 billion, changed hands on April 6. More than a tenth of the company’s shares changed hands each of the other days of the week; trading volume has gradually dwindled since then.
All of the world’s biggest banks now have offices in Hong Kong. So orders coming from Hong Kong may not have been placed on behalf of a company, investment fund or individual located there. The money could be coming from the banks’ clients all over the world, including in Japan itself.
Japanese officials are quick to look for Chinese involvement in commercial matters, particularly after China imposed a two-month embargo last autumn on shipments of crucial rare earth minerals to Japan during a territorial dispute over islands in the East China Sea.
But bankers said that the China Investment Corporation, the country’s sovereign wealth fund, seemed like an unlikely buyer of a large stake. China Investment has tended to avoid controversial acquisitions. The fund declined to comment on Monday.
A possible buyer might be a Japanese financial institution that did not believe Japan would allow such a prominent business to collapse.
Business leaders have been hostile to conjecture about an outright nationalization of Tokyo Electric, which has long been one of the bluest of Japan’s blue-chip companies and plays a central role in business groups. Nationalization seemed like a possibility two weeks ago, but has faded from the political dialogue since then.
Hiroko Tabuchi contributed reporting.
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