The Securities and Exchange Surveillance Commission called on the finance minister March 20 to take administrative action against Nikko Securities Co. for allegedly violating the Securities and Exchange Law and a ministry ordinance.

The brokerage is suspected of channeling roughly 291 million yen in profits from securities transactions to Shokei Arai, a House of Representatives lawmaker who committed suicide last month only hours before he was to be arrested for allegedly demanding the preferential treatment.

Two former Nikko executives -- former vice president Yumio Shiraishi and former managing director Hiroyuki Hamahira -- were also involved in the affair, the SESC said. According to commission officials, the illegal profit-offering arrangement involved 25 transactions that took place between October 1995 and June 1996. In addition, the account used by the lawmaker was a discretionary account, which is banned under the Securities and Exchange Law, they said.

In the recommendation, the SESC said it also found that Nikko had violated a Finance Ministry ordinance by artificially setting share prices to correct a mistake that occurred in connection with dealings in shares of Softbank Corp. on Oct. 31 last year.

The brokerage was supposed to make a bid for 5000 shares of Softbank at 3,650 yen before the market opened that day as part of a transaction involving an accumulative investment plan, but failed to place the order.

By the time the error was discovered later in the day, the price of the shares had risen to 3,860 yen, and the head of the over-the-counter stock division decided to sell Softbank shares through the brokerage's own account to lower the value to 3,650 yen so the bid could be placed.

Nikko itself reported the incident to the Japan Securities Dealers Association in February, and the JSDA in turn brought it to the attention of the SESC.