Press Release

1. Recommendation Issued

    The Securities and Exchange Surveillance Commission issued today a recommendation that the Prime Minister and the Commissioner of the Financial Services Agency (FSA) take administrative disciplinary action pursuant to Paragraph 1 of Article 20 of the FSA Establishment Act based upon the results of the inspection of BNP PARIBAS Securities (Japan) Limited (Tokyo Branch located in Otemachi, Chiyoda-ku, Tokyo; Direct Branch located in Ichibancho, Chiyoda-ku, Tokyo; Representative in Japan Yusuke Yasuda; staffed with approximately 460 employees including directors; hereinafter referred to as "BNP PARIBAS Securities"), which found the following facts constituting violations of laws and regulations by BNP PARIBAS Securities.


2. Facts Found

• A series of transactions for the sale or purchase of a security to create an artificial market without any reflection of the actual state of the market

      In connection with certain corporate bonds redeemable with shares ("Reference Share") of another company different from the bond issuer company, or the exchangeable bonds (the "EB"), such another company being a listed company, BNP PARIBAS Securities, through its (then) trader of the Equity Derivatives department, caused the Reference Share price to fall down one yen to 718 yen from the immediate prior contract price of 719 yen at the market by placing a limit sell order at 718 yen in a large quantity of the Reference Shares, and created a situation in which the closing price of the Reference Share would not have become equal to or higher than 719 yen unless all of such sell-ordered shares would have been sold, just before the end of the day's trading on 17th May, 2001, on which date how the EB be redeemed was to be determined; either in cash or with the Reference Shares, depending upon the day's closing price of the Reference Share, with the intention of putting the closing price at the level (lower than 719 yen) resulting in the EB redemption with shares, in order to enable BNP PARIBAS Securities to avoid risks as a holder of the Reference Shares that it had held in preparation of the redemption by delivery of the Reference Shares.

     As the result, the price of the Reference Share in fact closed at 718 yen, and with the EB's share redemption fixed, BNP PARIBAS Securities avoided risks as a holder of the Reference Shares.

      The foregoing is acknowledged to fall under the "act of making a series of transactions for the sale or purchase of a security to create an artificial market without any reflection of the actual state of the market" provided for in Item (3), Article 4 of the Ordinance of Cabinet Office Concerning Regulation, etc. of Conducts of Securities Company as applied by Paragraph 21 of Article 24 under the Ordinance of Cabinet Office Concerning Foreign Securities Firms based upon Item (9), Paragraph 1 of Article 42 under the Securities and Exchange Law as applied by Paragraph 1 of Article 14 under the Law on Foreign Securities Firms.