January 30, 2002 |
Recommendation based on the results of an inspection conducted for Morgan Stanley Japan Limited Tokyo Branch |
Today, the Securities and Exchange Surveillance Commission ("SESC") issued recommendation that the Prime Minister and the Commissioner of the Financial Services Agency ("FSA") take administrative disciplinary and other appropriate actions pursuant to Paragraph 1 of Article 20 of the FSA Establishment Law. This recommendation is based on the results of the inspection that the SESC completed today of Morgan Stanley Japan Limited ("Morgan Stanley") Tokyo Branch, which, as described below, ascertained the facts that Morgan Stanley and its employees acted against laws and regulations.
(1) A series of transactions to create an artificial market without any reflection of the actual state of market On December 4, 2001, intending to execute a large amount of short sale of a stock, traders of Morgan Stanley Securities realized that such execution was difficult, insomuch as buy orders were only placed at lower prices than the latest market price and short sale on a minus tick is prohibited by a Cabinet Order.
Item (3) of Article 4 of the Ordinance of Cabinet Office Concerning Regulation, etc. of Conducts of Securities Company prohibits a series of transactions to create an artificial market without any reflection of the actual state of market.
Morgan Stanley, on December 4, 2001, The above act violates Item (1) of Article 26-3 of the Cabinet Order. 2) Made a short sale for its own account many times at a price lower than the price of the stock which was published immediately prior to the short sale. The above act violates Item (1) of Article 26-4 of the Cabinet Order.
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