A former president of Japanese discount retailer Don Quijote Holdings Co., now known as Pan Pacific International Holdings Corp., was arrested Thursday by prosecutors for alleged involvement in insider trading in 2018.

Tokyo prosecutors suspect Koji Ohara, 57, illegally advised a male acquaintance several times in September that year to purchase Don Quijote shares for profit before the announcement of a takeover bid for the company by FamilyMart Uny Holdings Co., in violation of the Financial Instruments and Exchange law.

File photo taken Feb. 27, 2019, shows a Don Quijote discount store in Tokyo. (Kyodo) 

Ohara previously denied the charges during voluntary questioning prior to his arrest, according to sources familiar with the matter. The prosecutors have not disclosed whether Ohara has admitted or denied the allegation.

Don Quijote shares jumped from the 5,000 yen level to the upper 6,000 yen level after FamilyMart Uny Holdings, now FamilyMart Co., announced on Oct. 11, 2018, that it would make Don Quijote an affiliate.

Koji Ohara. (Kyodo)

Popular with young people and foreign tourists, a typical Don Quijote store, nicknamed "donki," operates around the clock and features floor-to-ceiling shelves with a huge variety of products, from electrical appliances and food to cosmetics to clothing.

The acquaintance purchased a total of 76,500 shares from early September through early October 2018 for around 430 million yen ($4.12 million).

In a revision to the financial instruments law in 2014, the government banned company executives from leaking information about business deals prior to the formal announcement, as well as advising others to trade stocks. Those who have been advised cannot be penalized unless they are aware of "significant information" related to the deals.

Although the acquaintance made profits totaling tens of millions of yen, he is believed to not have been informed on primary details of the deal.

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Prosecutors to charge ex-Don Quijote head over insider trading

FamilyMart Uny to make discount operator Don Quijote its affiliate