UPDATE 3-Wal-Mart unit involved in Japan insider trade probe

* Regulators examining process of making Seiyu fully owned

* Probe comes amid rising focus on insider trading in Japan
(Adds background, confirmation of investigation)

By James Topham

TOKYO, Nov 5 (BestGrowthStock) – Wal-Mart Stores (WMT.N: ), the world’s
biggest retailer, said it was cooperating with an investigation
into possible insider trading related to its takeover of Japanese
retail chain Seiyu Ltd.

News of the probe into trading around the Wal-Mart deal for
Seiyu adds to a growing focus on the problem of insider trading
in Japan, following news last week that regulators were
investigating suspicious short-selling ahead of share offerings.

Japan’s Securities and Exchange Surveillance Commission
(SESC) is looking into stock transactions conducted when Wal-Mart
turned Seiyu into a fully owned unit in 2007, a source confirmed
to Reuters after Japanese media reported the investigation
earlier in the day.

“We have fully cooperated with the authorities for their
investigation and will continue to do so,” said Kumie Wama, a
Tokyo-based spokeswoman for Wal-Mart. She declined to comment on
details of the investigation.

The securities watchdog has specifically been looking into
stock transactions conducted through accounts held by family
members of Seiyu personnel before the tender offer was announced
on Oct. 22, 2007.

The tender offer was proposed to Seiyu’s board, which
discussed its pros and cons at a meeting on Oct. 4, 2007. The
SESC suspects the trading took place after that meeting and
before the official announcement.

After the announcement, the price of Seiyu’s stock, which was
delisted in April 2008, jumped as high as 139 yen from 88 yen,
and the SESC estimates the trading generated up to 10 million yen
($123,800) in profits, the Nikkei said.

The investigation comes as the securities industry regulator
is interviewing brokerages after heavy short-selling was spotted
ahead of share issues, a source told Reuters last week.

Over the past few years Japan has been cracking down on
insider trading by bolstering the number of investigators looking
into suspected cases, Tokyo Stock Exchange spokesman Kazuhiko
Yoshimatsu told Reuters.

Although still far short of the several thousand officials
who pore over share transactions in the United States, Japan last
year raised the number of investigators by 10 to 384 people,
almost four times more than a decade ago. The number of
prosecutions and fines as a result has risen, said Yoshimatsu.

Last year the Tokyo exchange alerted the SESC to 178
suspected cases of illegal share activity. Of those, including
several reported by smaller bourses, the government agency acted
on 38 files compared with only 10 acted on five years ago. The
actions included seven prosecutions for insider trading.
($1=80.80 Yen)
(Reporting by James Topham, Noriyuki Hirata and Tim Kelly in
TOKYO and Shravya Jain in BANGALORE; Editing by Nathan Layne and
Michael Watson)

UPDATE 3-Wal-Mart unit involved in Japan insider trade probe