(Provisional Translation)
February 18, 2014
Securities and Exchange Surveillance Commission
The Securities and Exchange Surveillance Commission (“SESC”), today, made a recommendation to the Prime Minister and the Commissioner of the Financial Services Agency that an administrative monetary penalty payment order be issued in regard to market manipulation by Select Vantage Inc. (“Select Vantage”) pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency. This recommendation is based on the findings of the investigation into the market manipulation, whereby the following violations of laws and ordinances were identified.
Select Vantage, whose registered office is located at The Mason Complex, Suites 19 & 20, The Valley, Anguilla, is a so-called proprietary trading firm running a day-trading business worldwide.
Select Vantage, through traders who could be described as its proprietary trading force, in relation to its business, in shares of Torishima Pump Mfg. Co., Ltd. (“Torishima”) and Hoshizaki Electric Co., Ltd. (“Hoshizaki”), with the purpose of inducing orders from other market participants for the said shares, during 72 trade cycles in total from April 12 to April 24, 2012 as described on the Appendix, traded the said shares by placing a series of purchase and sale orders at multiple prices lower or higher than the best bid or offer without intention to be traded (a manipulative trading practice typically known as “layering”, “spoofing” or “gaming”) and, thus, on its own account, with respect to the shares of Torishima, purchased and sold 47,000 shares in total while placing non-bona fide orders for the purchase of 1,536,400 shares and for the sale of 811,900 shares in total, and, with respect to the shares of Hoshizaki, purchased and sold 61,900 shares in total while placing non-bona fide orders for the purchase of 2,062,700 shares and for the sale of 1,311,700 shares in total. This constituted a series of purchase and sale orders that would mislead other persons into believing that sale and purchase of the said shares were thriving and would cause fluctuations in prices of the said shares.
The above acts by Select Vantage were recognized as “a series of Sale and Purchase of Securities, etc.” and “entrustment, etc.” conducted “in violation of Article 159(2)(i)” as stipulated under Article 174-2(1) of the Financial Instruments and Exchange Act (“FIEA”).
Pursuant to the FIEA, the amount of the administrative monetary penalty applicable to the above violation is 60,000 yen.
Details of the calculation are presented in the Attachment.
We appreciate the assistance of the Ontario Securities Commission in this matter.
1. Pursuant to Article 174-2(1) of the FIEA, the amount of the administrative monetary penalty shall be calculated as below:
Amount pertaining to a Matching Volume of Sale and Purchase(Note 1): (Value pertaining to sale, etc. of securities) - (Value pertaining to purchase, etc. of securities)
Note 1: Matching Volume of Purchase and Sale: Whichever is smaller; number of securities sold or number of securities purchased concerning the violations.
2. In the present case, the amount of the administrative monetary penalty is 60,000 yen. This amount is calculated as a sum of the amounts for the 72 trade cycles on the Appendix, each of which has been rounded down for the amount less than 10,000 yen pursuant to Article 176(2) of the FIEA. In other words, the amount is calculated as a sum of the amounts for the 6 trade cycles from (1) to (6) below where the amount exceeds 10,000 yen for each applicable trade cycle.
(1) Trade Cycle No.14
1,879,200 yen (value pertaining to sale, etc. of securities)(Note 2)
- 1,867,000 yen (value pertaining to purchase, etc. of securities)(Notes 3)
= 12,200 yen.
Note 2: [1,043yen x 200shares + 1,044yen x 1,400shares + 1,045yen x 200shares]
Note 3: [1,035yen x 800shares + 1,036yen x 100shares + 1,038yen x 300shares + 1,039yen x 400shares + 1,040yen x 100shares + 1,044yen x 100shares]
(2) Trade Cycle No.15
2,209,200 yen (value pertaining to sale, etc. of securities)(Note 4)
- 2,196,500 yen (value pertaining to purchase, etc. of securities)(Notes 5)
= 12,700 yen.
Note 4: [1,052yen x 2,100shares]
Note 5: [1,045yen x 1,100shares + 1,046yen x 400shares + 1,047yen x 500shares + 1,051yen x 100shares]
(3) Trade Cycle No.67
3,675,910 yen (value pertaining to sale, etc. of securities)(Note 6)
- 3,662,380 yen (value pertaining to purchase, etc. of securities)(Notes 7)
= 13,530 yen.
Note 6: [1,934yen x 600shares + 1,934.1yen x 200shares + 1,934.2yen x 300shares +1,934.3yen x 200shares +1,934.7yen x 100shares +1,935yen x 300shares + 1,938yen x 200shares]
Note 7: [1,924yen x 300shares + 1,924.9yen x 100shares + 1,925yen x 300shares + 1,926yen x 400shares + 1,927yen x 100shares + 1,929yen x 200shares + 1,931yen x 300shares + 1,932yen x 100shares + 1,937.9yen x 100shares]
(4) Trade Cycle No.68
3,671,720 yen (value pertaining to sale, etc. of securities)(Note 8)
- 3,654,500 yen (value pertaining to purchase, etc. of securities)(Notes 9)
= 17,220 yen.
Note 8: [1,932yen x 600shares + 1,932.1yen x 100shares + 1,932.2yen x 200shares +1,932.3yen x 200shares +1,932.8yen x 100shares +1,933yen x 500shares + 1,933.1yen x 100shares + 1,933.2yen x 100shares]
Note 9: [1,918.8yen x 100shares + 1,919yen x 100shares + 1,919.8yen x 200shares + 1,919.9yen x 100shares + 1,921yen x 100shares + 1,922yen x 100shares + 1,922.9yen x 300shares + 1,923yen x 100shares + 1,924yen x 100shares + 1,925yen x 100shares + 1,926yen x 400shares + 1,927yen x 100shares + 1,933yen x 100shares]
(5) Trade Cycle No.69
3,296,610 yen (value pertaining to sale, etc. of securities)(Note 10)
- 3,282,970 yen (value pertaining to purchase, etc. of securities)(Notes 11)
= 13,640 yen.
Note 10: [1,937yen x 300shares + 1,938yen x 200shares + 1,939yen x 400shares +1,939.1yen x 200shares +1,940yen x 100shares +1,940.8yen x 100shares + 1,941yen x 300shares + 1,941.1yen x 100shares]
Note 11: [1,928yen x 100shares + 1,928.8yen x 200shares + 1,929yen x 100shares + 1,929.7yen x 100shares + 1,929.8yen x 100shares + 1,929.9yen x 300shares + 1,930yen x 300shares + 1,931yen x 100shares + 1,932yen x 200shares + 1,938.9yen x 100shares + 1,942yen x 100shares]
(6) Trade Cycle No.70
3,271,950 yen (value pertaining to sale, etc. of securities)(Note 12)
- 3,259,150 yen (value pertaining to purchase, etc. of securities)(Notes 13)
= 12,800 yen.
Note 12: [1,923yen x 500shares + 1,925yen x 800shares + 1,926yen x 200shares +1,926.2yen x 100shares +1,926.3yen x 100shares]
Note 13: [1,912yen x 100shares + 1,913yen x 100shares + 1,914yen x 100shares + 1,915yen x 200shares + 1,916yen x 200shares + 1,917.7yen x 100shares + 1,917.9yen x 200shares + 1,918yen x 600shares + 1,929yen x 100shares]