Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Tuesday, March 13, 2012, from 8:47 a.m. to 8:56 a.m.)

[Opening Remarks by Minister Jimi]

Today, I do not have anything to announce.

[Questions & Answers]

Q.

At the previous press conference, regarding a media report that the Financial Services Agency had been tipped off by an Asian securities supervisory organization, you said you will get back to us later after checking on that. Could you tell us about the results of your check?

A.

Regarding the question as to whether an Asian securities supervisory organization made an inquiry with the Securities and Exchange Surveillance Commission (SESC), my answer is that the FSA and the SESC exchange information with overseas organizations based on the Multilateral Memorandum of Understanding concerning Consultation and Cooperation and the Exchange of Information of the IOSCO, or International Organization of Securities Commissions.

It has been confirmed that no inquiry was made by an overseas securities regulatory organization about AIJ Investment Advisors as a result of checks on the records of information exchanged between the FSA and the SESC and overseas securities regulatory organizations over the period between 2007 and the start of the inspection of the company.

Over the same period, there was no inquiry made by an overseas anti-money-laundering organization with the FSA or the SESC about AIJ Investment Advisors

As you know, international exchanges of information regarding money laundering in Japan were managed by the FSA, specifically the General Coordination Division's Financial Intelligence Management Office at the Planning and Coordination Bureau until March 2007. However, as large-scale problems, such as financing for Al Qaeda emerged, this function was transferred in April 2007 to the National Public Safety Commission (Japan Financial Intelligence Center).

Let me also answer the question concerning an article carried by a weekly magazine, as I checked on that as well.

Records are not kept of all exchanges of opinions between officials of the FSA and the SESC and people related to nenkin joho magazine. However, as a result of inquiries, it was found that people related to nenkin joho had provided information to the relevant departments of the FSA and the SESC on several occasions between February 2009 and the start of the inspection of AIJ Investment Advisors.

Next, we checked the receipt of information by the contact offices of the FSA and SESC found out that the SESC's contact office received four pieces of information concerning AIJ Investment Advisors between 2005 and the start of the inspection, of which three were provided by anonymous sources and one by a source which gave its real name.

The SESC's contact section receives a total of around 6,000 to 7,000 pieces of information annually, of which around 1,000 concern financial instruments businesses.

The FSA's Counseling Office for Financial Services Users did not receive any information (including complaints and requests for consultation) concerning AIJ Investment Advisors between April 2008 and the start of the inspection.

Q.

Could you tell me what kind of information the FSA and the SESC received and how they responded? What are your thoughts on the FSA's responsibility?

A.

I can reply only in general terms. From the beginning, I have been stating that the FSA and the SESC take various criticisms sincerely and will make every possible effort to prevent a recurrence without ruling out any option including with regard to how they collect and use information. Basically, there has been no change in that policy.

Generally speaking, the FSA and the SESC take necessary actions after examining the information received in accordance with the relevance and usefulness of the information. As part of this activity, we may hold hearings and conduct an on-site inspection if necessary.

Q.

May I take it that you did not take any action?

A.

I think that I should not comment on any specific action. As the SESC is still conducting inspection, we need to wait until facts are clarified. In addition, as the supervisory authority, the FSA is conducting a survey targeting all companies managing customers' assets based on discretionary investment contracts. Therefore, as to the review of how to collect and use information, we will conduct a broad study in light of the results of the inspection and survey from the perspective of how inspection and supervision can be conducted in a more effective and efficient manner.

As I said at the beginning, this case is very regrettable from the FSA's standpoint. Therefore, we will make every possible effort to investigate facts, examine the cause and prevent a recurrence.

(End)

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