(Provisional Translation)
July 25, 2003
Financial Services Agency

An administrative action against
HSBC Securities (Japan) Limited, Tokyo Branch

1. Solicitation with promise of special benefit

The Securities and Exchange Surveillance Commission (SESC) conducted an inspection of HSBC Securities (Japan) Limited, Tokyo Branch (''the Branch'' hereafter), and found the following violation of the Securities and Exchange Law (''the Law'' hereafter). The SESC recommended the Commissioner of the Financial Services Agency (FSA) to take a disciplinary action against the Branch and notified the findings to the Branch on July 17, 2003.

(1)	In January 1997 and January 1998, the Branch solicited securities transactions from a certain customer (a securities investment advisor, which provides discretionary investment services) with a promise to make a payment to the customer under the pretext of an advisory fee, in return for orders from the customer.
(2)	The acts above are found to be ''solicitation with promise of special benefit'' in the Article 4(ii) of the Ordinance of Cabinet Office Concerning Regulation, etc. of Conducts of Securities Companies (formerly the Article 2(ii) of the Ordinance of the Ministry of Finance concerning Rules and Regulations Governing the Sound Management of Securities Companies).

2. The administrative action against the Branch

On the basis of the above finding, the FSA issued the following orders to the Branch today:

(1)	Suspend commissioned sales and purchases of stocks in the Branch from August 4, 2003 to August 6, 2003 (3 business days) except for the execution of transactions contracted on or before July 25, 2003.
(2)	Strengthen the internal control system, secure strict compliance by the directors and staff, make preventive measures against recurrence of the above-mentioned violation and clarify locus of responsibility.
(3)	Submit a written report to the FSA on the implementation of the (2) measure above by August 25, 2003.