(Provisional Translation)
March 20, 2002
Financial Services Agency
An administrative action against Okasan Securities Co., Ltd.
- On February 13, 2002 the Financial Services Agency (FSA) ordered Okasan Securities Co., Ltd. (''Okasan'' hereafter) to report about Short-selling in breach of Securities and Exchange Law (''the Law'' hereafter) based on the information obtained through the comprehensive review of compliance on short-selling regulation* , and the following legal violation of the Law was found.
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The comprehensive review of compliance on short-selling regulation was conducted by the member firms of the Japan Securities Dealers Association (JSDA) at the request of the FSA through the JSDA as a part of ''the comprehensive measures for short-selling of stocks'' announced on December 21, 2001. |
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Short-selling in breach of the Law In November 2001 Okasan executed short-selling of stocks on its own account without legally required disclosure of the fact of short-selling to the stock exchange many times. Because its internal control system was not adequate, staffs of Okasan failed to apply to borrow stocks to a securities finance company, though they executed the short-selling orders with the intention of settling by borrowing stocks from a securities finance company. |
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Short-selling settled by borrowing stocks from a securities finance company was not required to disclose the fact of short-selling to the stock exchanges. |
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The conduct above was found to violate the Article 26-3 (1) of the Cabinet Order (the Securities and Exchange Law) and the Article 162 (1) (i) of the Law, both of which regulate short-selling. |
- On the basis of the above findings, the FSA issued the following orders to Okasan to:
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Improve its compliance with the law |
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1) |
Strengthen its internal control system, secure strict compliance by the directors and staff, take preventive measures against recurrence of the above mentioned violations, and clarify locus of responsibility. |
2) |
Work out concrete measures with a target date to root out short-selling in breach of the Law, and to impose stricter internal penalty to a staff and his/her supervisor in the firm. |
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For further information, please contact with the following:
Securities Business Division
Supervisory Bureau
FSA, JAPAN (Tel : 03-3506-6000)
Deputy Director : Keiji Koide (ex.3353)
Section Chief : Hideki Ohashi (ex.3357)