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I. The Securities and Exchange Surveillance Commission (SESC)
conducted the investigation of Nikko Securities Co. (Nikko) based on
the provisions of the Securities and Exchange Law (SEL), and found
legal violations described below.
other appropriate measures against Nikko, pursuant to Article
191) of Ministry of Finance Establishment Law on March 20, 1998.
1. Providing property gains to compensate for losses Nikko, by
involvement of two then board members including the vice president,
for the purpose of compensating for a part of a customer's losses
incurred in securities trading, offered the customers :
1) approximately ¥6,800,000 in total by disguising its own profitabale securities tractions with an already fixed profit as
the customer's transactions six times between October 1995 and
August 1996;
2) approximately ¥22,300,000 in total by disguising its own
nineteen equity-buying transactions as the customer's transactions
nineteen times between November 1995 and June 1996;
(violationofSEL50-31)3))
2. Entering into an agreement to make discretionary trading
account to decide, without customer consent for each transaction,
whether to purchase or sell, and what issues of shares to be
purchased or sold in what number and at what prices, and executed
the customer's order based on this agreement from October 1995 to
March 1997.
(violationofSELArticle501)3))
II. The SESC conducted the inspection of Nikko Securities Co. (Nikko)
and found the legal violation as described below.
and other appropriate measures against Nikko pursuant to Article
19(1) of Ministry of Finance Establishment Law on March 20, 1998.
not reflect the market realities.
On October 31, 1997, Nikko failed to execute the purchase order
of specific stock which was supposed to be executed at opening
price. It was afternoon when Nikko found the failure and at that
time the market price of the stock was higher than the opening
price. Under this situation it was difficult for Nikko to purchase
the stock at the same price as the opening price.
Therefore, Nikko, by involvement of the then chief of over the
counter stock division, continued to place sell orders at lower
price between 2:49pm and 2:52pm for the purpose of driving down the
price to the opening price so that the sell order on his own account
could be matched with purchase order of the customer at the opening
price.
(violations of ministerial ordinance, according to SEL Article 50(1))
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