SEC investigating SoftBank for alleged market manipulation

SoftBank has invested in a number of companies including Uber Technologies, Didi Chuxing, Grab Holdings, Nvidia, ByteDance and DoorDash

The U.S. Securities and Exchange Commission (SEC) is investigating Japanese telecommunications company and investment giant SoftBank Group Corp. for alleged market manipulation.

Founded in 1981, SoftBank holds a significant share — 21.2% of Japan’s mobile phone subscription market as of 2020 — but is best known in the West for its prolific investment portfolio. The list of companies SoftBank has invested in includes Uber Technologies Inc., Didi Chuxing Co. Ltd., Grab Holdings Inc., Nvidia Corp., TikTok owner ByteDance Ltd. and DoorDash Inc.

Along with operating the world’s largest technology-focused venture capital fund, Softbank has a particular interest in ride-hailing companies. Except for Lyft Inc., SoftBank owns significant minority stakes in just about every other company in the market. When Grab purchased Uber’s Southeast Asian arm in 2018, it was a deal between two SoftBank-funded companies.

Its prolific investments are why it attracted the attention of the SEC. Although the report that the SEC was investigating SoftBank is confirmed, it was not disclosed exactly why and on what grounds it was being investigated.

According to Aaron Greenspan, the founder of the Think Computer Foundation that obtained the disclosure from the SEC,  the allegations relate to stock manipulation. Allegedly, SoftBank was responsible for stoking a huge rally in tech stocks in August that involved its buying billions of dollars worth of call options and in doing so saw shares in tech companies in which it had a stake a surge in value.

Vice reported that the rally caused shares in firms such as Tesla Inc. and Apple Inc. to rise 74% and 21%, respectively. Notably, SoftBank is not an investor in either company. Chief Executive Officer Masayoshi Son said in November that he feels “so stupid” for not investing in Elon Musk’s electric car company.

SoftBank is said to have gained a $4 billion profit at the beginning of September from the alleged market manipulation.