TOKYO -- A former outside director with a Japanese automotive electronic parts maker is under investigation for allegedly trading the company's shares using nonpublic information, a person with knowledge of the matter said.
After learning that Tokyo Stock Exchange-listed Sumida planned to significantly increase its dividend payout, the 64-year-old man allegedly bought a large number of shares and made considerable gains by selling them when the price rose after the information became public, the person said.
The Securities and Exchange Surveillance Commission has started an investigation, aiming to file a complaint with prosecutors on suspicion of violation the Financial Instruments and Exchange Act, the person said.
After Sumida announced a plan to increase its term-end dividend to 16 yen (15 cents) from the 6 yen earlier expected, its share price jumped above 1,200 yen from under 1,100 yen before the announcement.
Sumida, a Tokyo company that mainly makes coils for electronic components, is known as one of the companies to have introduced outside directors as calls for tighter corporate governance in Japan have risen.
The corporate governance code of the Tokyo Stock Exchange calls on listed companies to have multiple outside directors in principle. As of July 2017, 99.6% of companies listed on the first section of the exchange had at least one such director.
On the other hand, there have been challenges bringing in such directors due to a lack of qualified individuals and difficulties screening for people who meet the required standards and qualifications.
Nikkei submitted a written request for an interview with the person under investigation, but had received no response by publication time.
Sumida declined to comment.