(Provisional Translation)
April 22, 2014
Securities and Exchange Surveillance Commission
The Securities and Exchange Surveillance Commission, 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 misstatements of financial reports on material issues by TAIYO SHOKAI INC. (“TAIYO SHOKAI”) pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency. This recommendation is based on the findings of the disclosure statements inspection of the company, whereby the following violations of laws and ordinances were identified.
TAIYO SHOKAI, whose registered office is located at 6-35-3, Jingu-Mae, Shibuya, Tokyo, is a firm operating business support services and property trading. TAIYO SHOKAI submitted to the Director-General of the Kanto Local Finance Bureau its annual securities report, etc., containing false statements on material issues by recording fictitious sales based on sham sales contracts without underlying sales in reality, as stipulated under Article 172-4(1) and (2) of the Financial Instruments and Exchange Act (“FIEA”), as described in the table below.
| No. | Disclosure Document | False Statement | ||||
|---|---|---|---|---|---|---|
| Submission date | Document | Accounting period | Document related to financial calculation | Content (note) | Type | |
| 1 | June 28, 2013 | Annual securities report for consolidated accounting period of the 11th business year (Annual securities report for fiscal year ended March 2013) | Consolidated accounting period from April 1, 2012, to March 31, 2013 | Consolidated income statement | Consolidated ordinary income was found to be 5 million yen, but was stated as 43 million yen. Consolidated net income was found to be 11 million yen, but was stated as 50 million yen. |
-Recording fictitious sales -Overstating net assets |
| Consolidated balance sheet | Consolidated net assets were found to be negative 30 million, but were stated as positive 7 million yen. | |||||
| 2 | August 14, 2013 | Quarterly report for 1st quarter consolidated accounting period of the 12th business year (Quarterly report for 1st quarter ended June 2013) | 1st quarter consolidated accounting period from April 1 to June 30, 2013 | Quarterly consolidated balance sheet | Consolidated net assets were found to be negative 21 million, but were stated as positive 24 million yen. | -Overstating net assets |
| 3 | November 14, 2013 | Quarterly report for 2nd quarter consolidated accounting period of the 12th business year (Quarterly report for 2nd quarter ended September 2013) | 2nd quarter consolidated accounting period from July 1 to September 30, 2013 | Quarterly consolidated balance sheet | Consolidated net assets were found to be negative 44 million, but were stated as positive 858 thousand yen. | -Overstating net assets |
| 4 | February 14, 2014 | Quarterly report for 3rd quarter consolidated accounting period of the 12th business year (Quarterly report for 3rd quarter ended December 2013) | 3rd quarter consolidated accounting period from October 1 to December 31, 2013 | Quarterly consolidated balance sheet | Consolidated net assets were found to be negative 78 million, but were stated as negative 32 million yen. | -Overstating net assets |
Note: Rounded down to the nearest million yen.
Pursuant to the FIEA, the amount of the administrative monetary penalty applicable to the above violation is 12,000,000 yen.