Nobuhiko Matsuno, 59, vice chairman of the Regional Banks Association of Japan, was questioned by prosecutors about Yamaichi Securities Co. seeking his counseling when he headed the Finance Ministry's Securities Bureau in 1991, informed sources said March 17.

Yamaichi, the nation's fourth-largest brokerage, is believed to have started window-dressing its losses shortly before or after this time. Saddled with cumulative off-book losses of 264.8 billion yen, the firm decided last November to close down.

The special investigative squad of the Tokyo District Public Prosecutor's Office is believed to have questioned Matsuno to learn about Yamaichi's window-dressing of its accounts. According to the sources, Matsuno was questioned by prosecutors a few times in March of that year. During these sessions, he was asked to detail what kind of counseling Yamaichi executives sought from him.

Matsuno is to appear before the Lower House Budget Committee March 18 to provide testimony in the case.

Yamaichi was driven into a corner due to its "tobashi" practices, in which it hid client firms' losses from securities trading when the stocks' prices fell below the purchase price, by shifting them to other clients with different account terms, the sources said.

From November through December 1991, then Yamaichi Vice President Atsuo Miki, who later became president of the brokerage, sought Matsuno's counseling on a few occasions, they said. Miki is now under arrest on suspicion of violating the Securities Transaction Law.

Around this time, Yamaichi bought up securities with dormant losses at costs far higher than market prices from seven companies whose accounts were used to cover up the losses, the sources said. Although the tobashi practice is not illegal, it is unlawful for a brokerage to buy back the losses.