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FOCUS: Individual investors in Japan targeted by shady stock schemes.

TOKYO, Nov. 18 Kyodo

Individual investors in Japan who are trying to figure out where to invest their money are sometimes getting dragged into shady schemes that convince them to purchase unlisted stocks by promising high returns once they are listed.

One woman in her 50s living in Tokyo received a phone call in October in which the caller tried to persuade her to buy unlisted stocks. She was uncertain how the caller found her name and number, but asked the caller to send her the materials.

She received a flashy pamphlet that said: ''You can surely earn. It is like the discovery of a gold vein.''

The stock was priced at 500,000 yen, and a minimum of ten stocks had to be purchased -- requiring 5 million yen. Not sure whether to trust this offer, she got in touch with the consulting center of the Japan Securities Dealers Association.

The center started receiving a growing number of complaints and requests for consultations in the summer of last year. Some said they never received the stocks they had paid for, while others said the stocks they had bought were still unlisted.

There were 300 cases between April and September this year. The number is rising along with the overall growing interest among the Japanese public for making money in the stock market.

Interest in the stock market has also picked up due to a series of high-profile cases hitting the headlines recently such as the battle between Internet services company Livedoor and Fuji Television Network Inc. over shares in Tokyo Broadcasting System Inc., and the buying up of shares in Hanshin Electric Railway Co. by the Murakami Fund, and its proposal to list the stock of the Hanshin Tigers professional baseball team, which is under the wing of the railway company.

''We cannot say outright that (those soliciting investments) are untrustworthy, but based on common sense, (their stories) are not believable,'' said the head of the center, Masaru Shiraishi.

Since stocks tend to make a lot when they are listed, they are usually distributed among the management staff involved with the deal and not individual investors.

Individual investors therefore need to be very careful.

The Financial Services Agency wants post information about the growing problem on its homepage but is having difficulty since it may be out of its jurisdiction.

The Tokyo Stock Exchange is calling on investors to be careful and to confirm the details with the companies issuing the stocks. But there are also some dealers who discourage investors from contacting the companies, hinting at illegal insider activity.
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Publication:Japan Weekly Monitor
Date:Nov 21, 2005
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