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The Securities and Exchange Surveillance Commission (SESC) conducted
an inspection of Nikko Securities Co., Ltd. (Nikko) based on provisions
of the Securities and Exchange Law (SEL), and found legal violations
described below.
Today, the SESC sent a recommendation to the Prime Minister
and the Commissioner of Financial Services Agency (FSA) to take
a disciplinary action against Nikko pursuant to Article 20(1)
of the FSA Establishment Law.
- Misstatements concerning securities and other transactions
From April 1996 to October 1997, Nikko sold foreign bonds to
many corporate customers. With the involvement of a section
chief and other staff of the Bond Trading Division, Nikko misstated
an explanatory note, which is a sales material, on contents
of foreign securities of the bonds, and issued it to the customers.
Those misstatements were about a counter party of a currency
swap and the preference of redemption.
(Violation of a Ministerial Ordinance, Article 50(1)(vi) of
the SEL prior to the amendment of December 1, 1998)
- Provision of property gains to increase gains
From October 1 to 6, 1999, with the involvement of a section
chief of the Nishinomiya branch, Nikko provided property gains
for a customer on the purpose of increasing the customer's gains
by distributing IPO stocks, intentionally. In fact, those stocks
had been expected to rise, and the branch had only a few units
of the stocks to be distributed.
(Violation of Article 42-2 (1)(iii) of the SEL)
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