Japan Advisory was fined and had its license revoked in June after the Securities Exchange and Surveillance Commission (SESC) found it had shorted shares in Nippon Sheet Glass (5202.T) in August 2010 based on an inside tip the glassmaker was planning to issue new stock.

The case against the high-profile hedge fund was one of five announced this year by the SESC in an industry-wide crackdown on insider trading by investors who were getting tipped off by their brokers about public share offerings.

The hedge fund had submitted a written objection to the SESC's findings, prompting the Financial Services Agency, the financial industry regulator that oversees the SESC, to grant it a hearing in accordance with regular procedures.

A team of SESC prosecutors was in attendance and answered a few basic questions from the panel of three judges about their evidence in the case. The hearing, held in the same government building housing the FSA and SESC, was over in 25 minutes.

By failing to attend the hearing, Japan Advisory has waived its right to present evidence in its defense. But the panel did not render a judgment, saying they would deliberate the merits of the SESC's case and deliver a ruling at a later date.

No one could be reached at Japan Advisory for comment. A Reuters journalist visited the hedge fund's previously listed office in central Tokyo but all signs had been taken down and the lights were turned off.

The odds of Japan Advisory winning a favorable ruling had been widely viewed as unlikely from the start. All three panel members, including lead judge Kuniharu Goto who presided over Wednesday's hearing, are lawyers employed by the FSA.

It was not immediately clear why no one from the hedge fund was present. Even if the panel rules against it, Japan Advisory would in theory still have the option of bringing a lawsuit against the FSA.

More than 70 people showed up for the hearing, prompting the FSA to hold a lottery for a limited number of seats.

The case against Japan Advisory has garnered considerable media attention because of the large influence regulators believe the hedge fund and its chief, Edward Brogan, held over a wide swathe of the brokerage industry.

In August, the FSA ordered all major underwriters operating in Tokyo to report back on their dealings with Japan Advisory, which they suspect of paying outsized commissions in return for inside information.

(Reporting by Nathan Layne, Noriyuki Hirata and Issei Kato; Editing by Alex Richardson)

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