(Provisional Translation)
February 26, 2002
Financial Services Agency
An administrative action against Nikko Salomon Smith Barney Ltd., Tokyo Branch
- On February 13, 2002 the Financial Services Agency(FSA) ordered Nikko Salomon Smith Barney Ltd., Tokyo Branch (''the Branch'' hereafter) to report about Short-selling in breach of Securities and Exchange Law (''the Law'' hereafter) based on the information obtained through the comprehensive review of compliance on short-selling regulation*, and the following legal violation of the Law was found.
* The comprehensive review of compliance on short-selling regulation was conducted by the member firms of the Japan Securities Dealers Association (JSDA) at the request of the FSA through the JSDA as a part of ''the comprehensive measures for short-selling of stocks'' announced on December 21,2001.
- | Short-selling in breach of the Law In November 2001 the Branch executed short-selling of stocks on its own account without legally required disclosure of the fact of short-selling to the stock exchange many times. Because its internal control system was not adequate, staffs of the Branch failed to confirm whether stocks were available by a securities finance company (SFC) and the Branch failed to borrow stocks, though the Branch executed the short-selling orders with the intention of settling by borrowing stocks from SFC. |
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In addition, by the investigation on sampling trading days, the branch was found to have conducted short sales at a price lower than the latest published price immediately prior to the short sale. The conduct above was found to violate the Article 26-3 (1), the Article 26-4 (1) of the Cabinet Order (the Securities and Exchange Law) and the Article 162 (1) (i) of the Law, both of which regulate short-selling. |
- On the basis of the above findings, the FSA issued the following orders to the Branch to:
- | Improve its compliance with the law | ||||
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For further information, please contact with the following:
Securities Business Division
Supervisory Bureau
FSA, JAPAN (Tel : 03-3506-6000)
Deputy Director : Iichiro YOSHINO(ex.3352)
Section Chief : Noriyuki YOKOO(ex.3355)
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