THE ASAHI SHIMBUN
February 5, 2022 at 18:35 JST
Investigators prepare to cart away evidence of insider trading at the Tokyo offices of Tella Inc. on Feb. 4. (Ryo Oyama)
Three men were arrested by Tokyo police Feb. 4 on suspicion of involvement in an insider trading scheme revolving around the purchase of shares in a company developing a pharmaceutical to treat COVID-19.
The suspects were identified as Tsuyoshi Yamamoto, 43, Toshiaki Kubota, 53, and Heima Yamazaki, 49. They stand accused of violating the Financial Instruments and Exchange Law.
The Metropolitan Police Department said it suspects the trio purchased shares of Tella Inc., a Tokyo-based venture capital firm involved in the medical sector, before the company announced plans to develop a COVID-19 treatment in cooperation with Cenegenics Japan, a Tokyo-based company that is now in the midst of bankruptcy proceedings.
Yamamoto was a former aide to an executive with Cenegenics, while Kubota is president of Uchida Kensetsu Co., a Yokohama-based construction company, and at one time was the leading shareholder in Tella. Yamazaki is a company executive.
According to Tokyo police, the three purchased shares in Tella worth 40 million yen ($347,000) between April and May 2020 prior to an announcement by Tella and Cenegenics of a tie-up to develop a COVID-19 drug in Mexico.
The shares were purchased at a time when Japan was confronting its first wave of novel coronavirus infections.
The trio sold their shares to pocket 50 million yen once the development plan went public, according to investigative sources. Tella share prices skyrocketed by about 13-fold by June following the announcement.
Investigators with the Securities and Exchange Surveillance Commission searched the offices of Tella and Cenegenics in March 2021 for evidence of violations of the Financial Instruments and Exchange Law.
After April 2020, the two companies continued to announce further plans to develop the COVID-19 drug, including the start of clinical testing and approval of the drug by Mexican authorities.
But it turned out that Cenegenics’s claim that it had a subsidiary in Mexico was false. Tella dissolved the cooperative relationship after the company was unable to confirm that Mexican authorities had approved the drug.
The Tokyo District Court in September 2021 began bankruptcy proceedings for Cenegenics.
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