Press Release
June 23, 2003
Recommendation
Based on the inspection results of
Tokai Tokyo Securities Co., Ltd.


1. Recommendation Issued

    The Securities and Exchange Surveillance Commission today issued a recommendation that the Prime Minister and the Commissioner of the Financial Services Agency (FSA) take administrative disciplinary and other appropriate action pursuant to Paragraph 1 of Article 20 of the FSA Establishment Act based upon the results of the inspection of Tokai Tokyo Securities Co., Ltd. (located in Kyobashi, Chuo-ku, Tokyo; Okumura Masao as Representative Director and President; capitalized at approximately 36 billion yen; staffed with approximately 2,400 employees including directors), which found the following facts constituting violations of laws and regulations by Tokai Tokyo Securities Co., Ltd. and its employee.


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

    Manager at Equities Trading Department of Tokai Tokyo Securities Co., Ltd. from June 2002 to March 2003 placed in the course of the business a series of massive limit buy or sell orders without any intention of their execution in connection with those numerous issues of listed stocks which he had previously purchased or sold for the company's own account, with the aim of making the prices of the stocks move advantageously to the individual stocks' position (i.e., making the stock prices rise in case of long position or making the stock prices fall in case of short position) by inducing any of the other market participants to place orders for the purchase or sale of the same stocks.
    Incidentally, after the stock prices in fact rose or fell advantageously, the manager placed additional sell or buy orders to offset the previous long or short positions, and, upon having the additional orders executed at the advantageous prices, cancelled the above mentioned massive limit buy or sell orders.

    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 based upon Item (9), Paragraph 1 of Article 42 under the Securities and Exchange Law.

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