(Provisional Translation)
June 14, 2002
Financial Services Agency
An administrative action against Dresdner Kleinwort Wasserstein (Japan) Ltd., Tokyo Branch
1. Short-selling in breach of Securities & Exchange Law
(1) |
The Securities and Exchange Surveillance Commission (SESC) conducted an inspection of Dresdner Kleinwort Wasserstein (Japan) Ltd., Tokyo Branch (''the Branch'' hereafter), and found the following legal violations of the Securities & Exchange Law. The SESC sent the recommendation to the Commissioner of the Financial Services Agency (FSA) to take disciplinary action against the Branch on June 7, 2002.
- During the period between April 2001 and February 2002, the Branch placed a number of its customers' short-selling orders without legally required confirmation to the customers and disclosure to the stock exchange that the orders are short-selling.
- During the period between December 2001 and February 2002, the Branch placed a number of short-selling orders on its own account without legally required disclosure to the stock exchange that the orders are short-selling.
- In addition, the Branch was found to have placed short-selling orders at the lower prices than the latest executed and published ones.
|
(2) |
The acts above are found to violate the Article 26-3 (1), (2), (6) and the Article 26-4 (1) of the Cabinet Order (Securities & Exchange Law) and Article 162 (1) (i) of the Securities & Exchange Law, both of which regulate short-selling. |
2. Securities business without prior authorization and non-securities businesses without prior approval of or notification to the FSA
(1) |
The following violations of the Securities & Exchange Law were found as a result of the inspection conducted by the Inspection Bureau of the FSA.(The FSA already notified the Branch of the findings on June 7, 2002).
- The Branch conducted the following securities business without legally required prior authorization and non-securities businesses without legally required prior approval of or notification to the FSA;
1) |
Intermediation of trade in over-the-counter derivatives contract on a security. |
2) |
Intermediation of credit derivative transactions. |
3) |
Intermediation of cash lending/borrowing. |
4) |
Intermediation of sale or purchase of monetary credit. |
5) |
Intermediation of trade other than one relating to securities |
|
(2) |
The acts above are found to violate the Article 7 of the Law on Foreign Securities Firms (LFSF), the Article 34 (3) and (4) of Securities & Exchange Law applied based on 14 (1) of the LFSF. |
3. The administrative action against the Branch
On the basis of the above findings, the FSA issued the following orders to the Branch:
(1) |
Suspend business operation |
|
1) |
Suspend commissioned sales and purchases of stocks on behalf of affiliated companies for 10 business days between June 17, 2002 and June 28, 2002. |
2) |
Suspend the businesses listed in 2.(1), which were conducted without prior authorization, approval or notification, for 5 business days between June 17, 2002 and June 21, 2002. |
|
(2) |
Improve its compliance with the law |
|
1) |
Strengthen the internal control system, secure strict compliance by the directors and staff, make preventive measures against recurrence of the above mentioned violations, and clarify locus of responsibility. |
2) |
Work out concrete measures to root out short-selling in breach of the Law including a target date, and to impose stricter internal penalty to a staff and his/her supervisor in the Branch. |
3) |
Quarterly submit a written report to the FSA on the implementation of the 1) and 2) measures above. |
|
For further information, please contact with the following:
Securities Business Division
Supervisory Bureau
FSA, JAPAN (Tel: 03-3506-6000)
Deputy Director: Atsushi SASAGAWA(ex.3370)
Section Chief: Yoshikazu HIRAI(ex.3356)