The Securities and Exchange Surveillance Commission (SESC) conducted
an inspection of Tokyo-Mitsubishi Securities Co., Ltd. (Tokyo-Mitsubishi),
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
disciplinary actions and appropriate actions against Tokyo-Mitsubishi
pursuant to Article 20(1) of the FSA Establishment Law.
- Act of making a series of securities transactions to create
artificial market prices which does not reflect the actual state
of the markets
In relation to an Equity Exchangeable Bond (EB) for stocks of
a listed company, for the purpose of lowering the stock price,
Tokyo-Mitsubishi sold the stocks by placing a series of lower
limit or no limit orders from 14:59 until the close on January
17, 2001. In fact, whether additional interests (bonus coupon)
of the EB were payable was dependent upon the stock price on
the very date of January 17, 2001.
As a consequence of the deliberate selling, the stock price
fell short of the benchmark price for additional interests,
and the payment worth approximately 365 million-yen could be
(Violation of a Ministerial Ordinance, Article 42(1)(ix) of
- Solicitation with promise of special profit
In June 1998, Tokyo-Mitsubishi bought bonds from a corporate
customer, and then sold the bonds to its parent company, by
order of the customers. Thereafter, the customers requested
Tokyo-Mitsubishi to annul the bonds transactions, nevertheless.
In July 1998, Tokyo-Mitsubishi with an agreement of the customers
carried out other transactions, which could cancel out the effects
of the original transactions.
Under the newly proposed transactions, Tokyo-Mitsubishi bought
back the bonds from the original buyer, and sold back to the
As the second buy-back and sale-back were conducted by the same
price as the original transactions, the brokerage commission,
which Tokyo-Mitsubishi had gained from the original transactions,
was provided to the customers. Moreover, Tokyo-Mitsubishi promised
the exemption of a brokerage commission from those reverse transactions.
This can be identified as an act of the solicitation into securities
transactions with a promise of special profit.
(Violation of a Ministerial Ordinance, Article 50(1)(vi) of
the SEL, prior to the amendment of December 1,1998)