A sign of SMBC Nikko Securities Inc. is seen in this 2019 file photo. (Mainichi/Kazuhisa Soneda)

       TOKYO (Kyodo) -- SMBC Nikko Securities Inc. said Tuesday the brokerage and its employees have been investigated by Japan's securities watchdog over suspicious stock transactions.

       The major Japanese brokerage admitted that the company and its employees are being probed by the Securities and Exchange Surveillance Commission, but declined to comment further. "We will continue to cooperate fully with the SESC with respect to the investigation," it said in a statement.

       According to sources close to the matter, the regulator has searched the company's headquarters on suspicion of alleged market manipulation through repeated transactions of certain individual stocks to prevent their share prices from falling.

       The brokerage is suspected of illegitimately maintaining the price of stocks that were traded in transactions called "block offerings."

       Such transactions are used when large shareholders sell a significant part of their stake in a company. Securities houses often buy such shares outside trading hours and invite investors interested in buying them.

       In block offerings, SMBC Nikko presents a share price to large shareholders and investors based on the closing price of the day when the deal is made, the sources said.

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