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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 ING Securities (Japan)
Limited (Tokyo Branch located in Kioicho, Chiyoda-ku, Tokyo;
Representative in Japan John Howland-Jackson; staffed with approximately
200 employees including directors; hereinafter referred to as "ING
Securities"), which found the following facts constituting violations of
laws and regulations by ING Securities.
2. Facts Found
- Act of soliciting business from any customer with a
promise to provide any special benefit to the customer
In January 1998, ING Securities
solicited business from a certain corporate customer who had held a note
of almost no redemption value immediately before maturity, with a
promise to enable the customer to delay realizing losses, by presenting
a scheme in which the customer would acquire a new note into which the
losses would be transferred and simultaneously purchase another
different note to bear the expenses arising from, inter alia, the
issuance of the new note, for the sole purpose of keeping the losses
unrealized.
The foregoing is acknowledged to fall under the "act of
soliciting business from any customer with a promise to provide any
special benefit to the customer, in connection with the sale or purchase
of, or any other form of transaction in, a security" provided for in
Item (2), Article 2 of the Ministerial Ordinance Concerning Prudential
Standards, etc. of Securities Company (before the Ordinance No. 33 of
Prime Minister's Office and Ministry of Finance of 1998 became effective
on December 1, 1998) as applied by Paragraph 4 of Article 21 under the
Ministerial Ordinance Concerning Foreign Securities Firms (before the
Ordinance No. 37 of Prime Minister's Office and Ministry of Finance of
1998 became effective on December 1, 1998) based upon Item (6),
Paragraph 1 of Article 50 under the Securities and Exchange Law (before
the Law No. 107 of 1998 became effective on December 1, 1998) as applied
by Paragraph 1 of Article 17 under the Law on Foreign Securities Firms
(before the Law No.107 of 1998 became effective on December 1, 1998).
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