Press Release
September 14, 2004
Securities and Exchange Surveillance Commission

Recommendation Based on the Inspection Result of
Tokyo Branch of Citibank, N.A.


1. Recommendation Issued


The Securities and Exchange Surveillance Commission (''SESC'') today issued recommendations that the Prime Minister and the Commissioner of the Financial Services Agency (''FSA'') take administrative disciplinary action and other appropriate measures, pursuant to Paragraph 1 of Article 20 of the FSA Establishment Act. The recommendations are based on the results of the inspection of Tokyo Branch of Citibank, N.A. (Higashi-Shinagawa, Shinagawa-ku, Tokyo; Douglas L. Peterson as a Chief Executive Officer Japan; staffed with approximately 2,000 employees including directors), which, as described below, found the facts constituting violations of laws and regulations by the aforementioned registered financial institution and its employees.


2. Facts Found
(1) Act of making representation of a misleading statement on material matter in connection with handling of private placement of securities

Two Vice Presidents in Marunouchi Branch of Citibank, N.A., in the course of business, on June 4, July 4, and August 28, 2003, each made representation of misleading statements on material matters in soliciting several customers with regard to the nature of structured bonds they offered through private placement.

The aforementioned act of the registered financial institution and its employees is acknowledged to fall under "the act of making representation of a misleading statement on any material matter in connection with handling of private placements of securities" prescribed in Item 1 of Article 21 of the Ordinance of Cabinet Office concerning Securities Business of Financial Institutions based on Item 9, Paragraph 1 of Article 42 of the Securities and Exchange Law, which is applied to Paragraph 5 of Article 65-2 of the Securities and Exchange Law.


(2) Act of handling private placement as a condition of granting credit

The Marunouchi Branch of the registered financial institution, in the course of private banking business, in April 2003, made solicitation to offer the acquisition of structured bonds to particular customers at the same time it proposed a loan to the same customers to be appropriated for, among others, the costs of purchasing the bonds, making the purchase of the bonds a condition for providing a loan which falls under the act of handling private placement as a condition for granting credit.

The aforementioned act of the registered financial institution is acknowledged to fall under "the act of handling private placement as a condition of granting credit" prescribed in Item 6 of Article 21 of the Ordinance of Cabinet Office concerning Securities Business of Financial Institutions based on Item 9, Paragraph 1 of Article 42 of the Securities and Exchange Law, which is applied to Paragraph 5 of Article 65-2 of the Securities and Exchange Law.

 

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