Japanese May Form Agency to Police Brokers : Securities: Authorities are under pressure in the wake of recent scandals.

Scandals at top Japanese brokerages are pushing authorities to create a securities watchdog, but analysts say the agency is likely to lack the bite of the U.S. Securities and Exchange Commission.

“I don’t see it being effective in the way that Westerners would perhaps hope for or expect,” said Simon Smithson, director of research at Kleinwort Benson International Inc.

Japan’s securities industry has been rocked by scandals in which more than 20 top brokerages improperly compensated favored clients for huge investment losses.

Two brokerages--Nomura Securities Co. and Nikko Securities Co.--have also admitted links to a crime syndicate boss. Nomura is being investigated for allegedly manipulating a company’s stock price to benefit the same gangster.

In the latest revelation, Japan’s Fair Trade Commission said Monday that it is investigating Nomura for allegedly unfairly controlling shares of one of its subsidiaries.

Critics have charged that the Ministry of Finance bears a large part of the blame for the widespread scandals since its bureaucrats have traditionally been more concerned with protecting and fostering brokerages than with regulating them.

Such criticism sparked calls to create an independent securities watchdog, and in late July, Prime Minister Toshiki Kaifu asked an advisory panel to consider the matter. That panel is expected to issue its recommendations today.