March 30, 2006
Financial Services Agency
Government of Japan
Administrative Action on JP Morgan Asset Management (Japan) Limited.
1. According to the result of the on-site inspection conducted by the Financial Services Agency (hereinafter referred to as '' the FSA '') of JP Morgan Asset Management (Japan) Limited. (hereinafter referred to as '' the Company '') and subsequent reporting order issued by the FSA to the Company based on Article 36 (1) of the Law Concerning Regulation, etc. of the Investment Advisory Business Relating Securities (hereinafter referred to as ''the Law''), the following violations of the Law were found.
(1) Dealing foreign currency on the discretionary investment agreement, a dealer employed by the Company intentionally transferred the loss resulting from the miss-order to other customer's accounts which had orders at the same time when the miss-order happened, in order to hide the loss.
The act above is a violation of ''the duties of loyalty for the sake of customers'' stipulated in the Article 30-2 of the Law.
(2) When the Company ordered to purchase a certain kind of privately-placed investment trusts on the discretionary investment agreements, the Company advanced the amount of the settlement proceeds on behalf of the customers.
The acts above are a violation of ''the prohibition against lending money to customers'' stipulated in the Article 20 of the Law as applied by the Article 33 of the Law.
2. On the basis of the above findings, the FSA issued the following business improvement order to the Company today, based on Article 37 of the Law.
- Business Improvement Order
- Strengthening the internal control system, including establishment of the proper compliance system
- Setting up and implementing concrete measures for ensuring strict compliance by all the directors and staffs
- Taking preventive measures against the recurrence of the above-mentioned violations, and clarifying locus of responsibility
- Submitting a report to the FSA on the implementation of the above measures by May 1, 2006
Financial Services Agency, Government of Japan
Tel +81-(0)3-3506-6000 (main)
Securities Business Division, Supervisory Bureau (ext. 3353, 3724)
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