Press Conference by Yuji Yamamoto, Minister for Financial Services

(Excerpt)

March 2, 2007

Q.

Concerning Nikko Cordial, the company submitted a correction report on February 27, and a plan to seek damages from former President Arimura and other former managers was unveiled. What are your views on these matters?

A.

I am aware that correction reports for the periods covering the September 2004 term to the March 2006 term were submitted to the Kanto Local Finance Bureau. As this is a matter concerning an individual company, I would like to refrain from making specific comments. In any case, I believe that appropriate disclosure of corporate financial information is essential for ensuring trustworthiness in the financial market. I hope that the parties concerned will make efforts to ensure appropriate disclosure so as to prevent the reoccurrence of cases like this.

Q.

I expect that the Tokyo Stock Exchange (TSE) will make a decision as to whether or not to delist Nikko upon the receipt of the correction reports. Could you share with us your views on the delisting issue in light of past cases?

A.

It is entirely up to the TSE to judge whether or not false reporting has had a social impact, and I expect that the TSE will make this judgment appropriately and promptly.

Q.

According to a proposal presented yesterday concerning civil monetary penalties to be introduced under the amended Certified Public Accountants Law, the maximum civil monetary penalties would be 1.5 times as much as the fee amount. I understand that some people say the maximum amount should be larger and others are calling for a smaller amount. What is your view on this issue?

A.

The multiple of 1.5 times was determined to be an appropriate level suited to deterring positive and passive involvement of certified public accountants in compiling false statements. Concerning the nature of administrative civil monetary penalties, there are two views; one regards civil monetary penalties as a means to recover illegally obtained profits and the other regards them as a punitive measure. I believe that the proposal is moderate and well-balanced from both points of view.

Q.

Do you think this will sufficiently enhance the deterrent effect?

A.

The deterrent effect is certain to be strengthened and I think that this is the best proposal now imaginable.

(End)

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