Press Release

July 17, 2003

Recommendation based on the inspection results of HSBC Securities (Japan) Limited

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 action pursuant to Paragraph 1 of Article 20 of the FSA Establishment Act based upon the results of the inspection of HSBC Securities (Japan) Limited (Tokyo Branch located in Nihonbashi, Chuo-ku, Tokyo; Michael Guy Hilliard Heald as Representative in Japan; staffed with 340 directors and employees; hereinafter referred to as ''HSBC Securities''), which found the following facts constituting violations of laws and regulations by HSBC Securities. 2. Facts Found Act of soliciting business from any customer with a promise to provide any special benefit to the customer       In January 1997 and January 1998, HSBC Securities solicited securities transaction from a certain customer (a securities investment advisor, which provides discretionary investment service) with a promise to make a payment to the customer under the pretext of advisory fee, in return for orders from the customer.       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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