Press Conference by Tadahiro Matsushita, Minister for Financial Services

(Excerpt)

(Friday, July 27, 2012, from 9:17 a.m. to 9:36 p.m.)

[Questions & Answers]

Q.

I have several questions.

First, regarding insider trading related to public offerings of new shares, Nomura Securities announced yesterday (July 26) the resignation of two top executives. Nomura aims to make a fresh start under the new management team led by Mr. Nagai (Chief Executive Officer). Could you give us your frank opinion on the way Nomura's management team has taken responsibility as the top management of Japan's leading securities company?

A.

I am aware that various matters came to light as a result of the company's internal investigation, as you suggested. However, I would like to refrain from commenting on the appointment of personnel at specific companies.

Regarding the results of the internal investigation, which were announced yesterday, Nomura Securities conducted a wide-ranging investigation as to whether there were problems concerning the management of corporate information related to stocks other than the ones for which wrongdoing was detected in the monetary penalty investigation. The company also announced the progress status of the corrective measures announced on June 29. Therefore, the Financial Services Agency (FSA) thinks that the company is exercising the self-purification function to a reasonable degree, which deserves a positive evaluation on the whole. I strongly hope that the new management team will lead internal reform to restore trust and make a fresh start. As the new CEO has expressed his intention to carry out fundamental reform, I would like to make it clear that I am placing strong hopes on that.

The FSA will continue to keep watching the effort of the Nomura Securities group's new management team to restore trust. I will closely watch how the company will carry out the reform.

Q.

Yesterday, Nomura Securities announced the results of an additional investigation, and as you mentioned now, it disclosed that it had found several cases, other than the three cases that had previously been exposed, in which corporate information is highly likely to have been leaked. In addition, the investigation confirmed several suspicious practices, such as frequent use of mobile phones-calls on which can not be recorded-before the announcement of plans for public offerings of shares. Do the FSA and the Securities and Exchange Surveillance Commission (SESC) intend to conduct investigation or take some other action regarding these practices?

A.

I am aware that there are cases, other than the cases regarding which monetary penalty was recommended, in which corporate information is highly likely to have been communicated, as you mentioned now. I would like to refrain from commenting on what actions may be taken regarding specific cases, as I have done until now. However, generally speaking, if a problem is recognized with regard to a securities company's business operation, the FSA will take appropriate actions in accordance with laws and regulations.

Q.

Nomura Securities also explained the progress status of the corrective measures announced around one month ago. What is your assessment of that?

A.

I am aware that in relation to the cases of insider information leakage, an announcement was made regarding the progress status of the corrective measures and the additional investigation. As for the results of the internal investigation, the company conducted a wide-ranging investigation as to whether there were problems regarding the management of corporate information related to stocks other than those for which wrongdoing was detected in the monetary penalty investigation. The company also announced the progress status of the corrective measures announced on June 29. Therefore, the FSA thinks that the company is exercising the self-purification function to a reasonable degree, which deserves positive evaluation on the whole.

For one thing, Nomura Securities has said it will mostly complete the investigation by the end of August. For another thing, the company has established an internal committee directly under the president which is responsible for dealing with these cases. Therefore, on the whole, we think that the company has exercised the self-purification function to a reasonable degree.

The important thing is that these measures will be effectively implemented, so we will continue to closely examine the results of the series of internal investigations conducted by the company and the implementation of the corrective measures. In light of the results of a special inspection being conducted by the SESC, we will consider what administrative actions to take.

Q.

What administrative actions are likely to be recommended or taken?

A.

As for administrative actions that may be taken, I would like to refrain from making comments.

In any case, the FSA will continue to closely examine the results of a series of internal investigations conducted by the company and the implementation of the corrective measures. In addition, we will consider what administrative actions to take in light of the results of a special inspection being conducted by the SESC.

Q.

Regarding insider trading related to public offerings of new shares, the view is spreading widely in the market that insider trading may have been conducted because the number or value of shares publicly offered is so large as to distort the market, or because they had to facilitate the underwriting of new shares. What is your view on public offering and third-party allotment of new shares in relation to the market?

A.

As I do not have sufficient information, I would like to refrain from making comments regarding each specific case. At any rate, Nomura Securities must take appropriate actions as the leading securities company and must avoid producing significant negative effects on the market. I also hope that the company will appropriately deal with this problem with a proper sense of professional ethics.

In that sense, I would like Nomura Securities' new management team to make efforts to show that the company has reformed itself by taking appropriate actions and setting an example as the leading securities company.

Q.

Since you took office as the minister for financial services, you have had a hard time dealing with the scandal over insider trading related to public offerings of new shares. At a press conference in June and before the results of Nomura's internal investigation was announced yesterday, you sometimes said that the company was halfway through exercising the self-purification capability. How do you evaluate the exchange of communications between Nomura and the authorities that have been held so far?

A.

I am not aware of specifics of the communications between Nomura and officials in the FSA, so I would like to refrain from making comments. However, this scandal has generated much distrust in Japan and has drawn a very critical eye from abroad, so since immediately after I took office, I have expressed my hope that Nomura Securities will exercise the self-purification capability and carry out internal reform as the leading securities company. I think that the company has done what should be done for the moment.

However, the important thing is how Nomura Securities will act from now on after making a fresh start. Nomura Securities must reflect the results of its internal investigation in its efforts to regain credibility and trust, and it must strive to achieve results. The company's efforts will draw attention from both within and outside Japan, so I hope that it will strive to achieve results. In that sense, I think that the company is still halfway through its reform.

However, I have very high regard for the company's plan to make a fresh start under the new management team and for the new CEO's resolve to carry out fundamental reform. I strongly hope that the company will make constant efforts to achieve results and I am keeping a close watch on those efforts.

Q.

You declined to comment on the way that the management team has taken responsibility, but how do you expect that the change in the management team will affect the company's conduct of business?

A.

I presume that the company has decided to make a fresh start under a new management team because the insider trading scandal has generated various suspicions and undermined trust both in and outside Japan. It all depends on efforts by all executives and employees of the company to carry out fundamental reform under the new management team. I hope the company will make such efforts. I hope that each and every business division and department will make such efforts. I understand that the CEO has expressed the company's eagerness to carry out fundamental reform. I want the company to achieve results.

Q.

Editor-in-chief Abe of Facta Publishing, who sometimes attends your press conferences, has recently been writing articles concerning the financial window-dressing by Bank of Tokyo-Mitsubishi UFJ. Could you comment on those articles?

A.

I am not aware of the contents of Facta's articles, so I would like to refrain from making comments.

Q.

At a press conference yesterday CEO Watanabe of Nomura Holdings said that there was a lack of communications with the administrative authorities. Is that view shared by the administrative authorities?

A.

I did not hear first-hand what he said, so I cannot answer your question. However, of course, I believe various communications should be held through business activities, supervisory processes and inspection. I do not have sufficient information to comment on what was lacking and what was sufficient, so I have nothing more to say for now.

Thank you very much.

(End)