Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Tuesday, April 17, 2012, from 10:04 a.m. to 10:16 a.m.)

[Opening Remarks by Minister Jimi]

Today, I do not have anything particular to announce.

[Questions & Answers]

Q.

I will ask you two questions. First, a meeting of the G-20 Finance Ministers and Central Bank Governors will be held in Washington from April 19. What do you expect will be discussed at the meeting?

A.

As you mentioned now, the meeting of the Finance Ministers and Central Bank Governors of the Group of 20 major countries will be held in Washington on April 19 and 20. As I have repeatedly mentioned, the biggest difference between the period of the Great Depression of 1929 and the global crisis that followed the Lehman Shock is that in the current international financial economic situation, individual countries' authorities routinely exchange opinions at various levels and appropriately cooperate with each other. I believe that policy coordination is very important, especially amid the ongoing globalization. The meeting of the G-20 Finance Ministers and Central Bank Governors is a particularly important meeting, and I hope that meaningful discussions will be held toward global economic and financial stability. This year's chair is Mexico, and as you know, it is customary not to announce the meeting's agenda in advance. However, naturally, a communiqué will be issued after the meeting.

Q.

I understand that on April 13, the Securities and Exchange Surveillance Commission (SESC) recommended that the Financial Services Agency (FSA) take administrative action against SMBC Nikko Securities Inc. In the recent case of insider trading conducted by an employee of Chuo Mitsui Asset Trust and Banking Company, Nomura Securities provided information. What actions will the FSA take in response to the similar illegal acts committed by the two major securities companies? If the FSA takes no action, it will send to the market a signal that all Japanese securities companies may be engaging in illegal acts and the Japanese authorities may be tolerating that. What would you say to that?

A.

Regarding SMBC Nikko Securities, on Friday, April 13, the SESC recommended that the FSA take administrative action against the company, which was found to have committed an illegal act as a result of an inspection. The SESC is an independent organization, as you know, so I do not have the power to give it instructions. The law stipulates that SESC issue recommendations for the FSA. Taking this recommendation seriously, the FSA will strictly deal with this case in accordance with laws and regulations.

Q.

Are you considering any specific actions, such as taking measures to prevent a recurrence of similar acts and revising rules?

A.

Although you may want to know what administrative actions will be taken and when, I cannot answer your question at this time, since the FSA decides what actions to take by taking comprehensive account of the graveness and maliciousness of the illegal act, and the governance and business operation systems that constituted the background. Taking this recommendation seriously, the FSA will strictly deal with this case, as I mentioned just now, while keeping in mind the matters you mentioned. In principle, markets must be fair, transparent and vigorous. That is the internal standard. In particular, it is basically very important that transparency be maintained and each company appropriately exercise governance. Suspicions that there may be problems in the Japanese market should in no way arise. As the establishment of the FSA is intended to ensure the development of a fair and transparent market, we will do all we can based on that principle and strictly deal with this case.

Q.

Regarding the problem of AIJ Investment Advisors, witnesses were summoned to testify on April 13. May I ask for your frank impressions of the testimony? Also, will the testimony have any effects on the FSA's future actions?

A.

The testimony by witnesses, including President Asakawa of AIJ Investment Advisors, before the House of Representatives' Committee on Financial Affairs is a matter relating to deliberations by the legislative branch, so as the head of an administrative agency, I should refrain from making comments in light of the principle of the separation of the legislative, administrative, and judicial branches. At the same time, the FSA is keeping a careful watch on the witnesses' testimony.

Regarding this case, the SESC is still conducting a court-authorized criminal investigation. The criminal investigation aims to bring criminal accusations. When facts have been clarified, the FSA will take strict actions. This case has developed into a very major social issue, and both the House of Representatives and the House of Councillors have summoned witnesses to make unsworn testimony and the House of Representatives summoned witnesses to make sworn testimony as well. Depending on the circumstances, the House of Councillors may also summon witnesses to make sworn testimony. This case concerns corporate pensions of individuals in this aging society. As you know, AIJ Investment Advisors has managed part of employee pension assets on behalf of the government, so this case concerns not only the FSA but also the Ministry of Health, Labour and Welfare, and related organizations.

Yesterday, I attended a conference of trust companies, and talked about two subjects. One of them was the entrustment of pension assets to trust banks. Entrusted trust banks give various instructions regarding asset management, which are followed by asset investment companies. That has been the arrangement until now. As was mentioned in the Diet several times, it was suggested at the conference of trust companies that pension fund associations should provide various information to trust banks which undertake the administration of pension assets so that they can understand the complex asset investment schemes. The FSA is taking on the responsibility for grasping the current situation, examining the cause of this problem and preventing a recurrence. As a way to prevent a recurrence, the idea of revising the role of trust banks was suggested. I was told yesterday that in response to this suggestion, the Trust Companies Association of Japan voluntarily set up a project team to study the idea. The FSA, together with relevant ministries and agencies and various industries, will make every possible effort to prevent a recurrence of this problem.

Thank you very much.

(End)