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The Securities and Exchange Surveillance Commission (SESC) conducted
the inspection of Deutsche Securities Limited, Tokyo Branch (Deutsche)
based on the provisions of the Law on Foreign Securities Firms
(LFSF) and found legal violations described below.
SESC sent the recommendation to the Financial Reconstruction
Commission (FRC) and the Commissioner of Financial Supervisory
Agency to take disciplinary action against Deutsche pursuant to
Article 29(1) of FRC Establishment Law on May 15, 2000.
(1) Solicitation with promise of special profit.
In September 1997 and March 1998, with the involvement of the
managing director of the integrated product group, etc., Deutsche
solicited three corporate customers with promises to avoid realizing
a redemption loss of a note which the customers purchased before,
by the scheme in which customers would purchase another note mainly
to put off a redemption loss of the note. The value of the note
that was just before redemption was almost nothing.
(Violation of LFSF 17(1), which is the law before the amendment
in 1998)
(2) Transaction with Specific Corporations on terms and condition
which are at variance with those of normal transactions.
Between November 1998 and October 1999, Deutsche accepted orders
on securities future trading from its parent corporation (Specific
Corporations). With regard to some of the orders, Deutsche paid
commission fee and trading margin that were supposed to be paid
by its parent corporation.
(Violation of LFSF 14(1))
(Violation of LFSF 17(1), which is the law before the amendment
in 1998)
(3) Failure to submit of transaction reports to customers.
Between November 1998 and October 1999, with regard to some of
the orders on securities future trading from its parent corporation,
Despite the fact that the orders had been settled on the session,
Deutsche didn't submit the transaction reports on some of the
orders.
(Violation of LFSF 51(3))
(Violation of LFSF 37(3), which is the law before the amendment
in 1998)
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