Press Release
May 21, 2004
Based on the inspection results of
UBS Securities Japan Ltd.

1. Recommendation Issued

      The Securities and Exchange Surveillance Commission(''SESC'') 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 UBS Securities Japan Ltd. (Tokyo Branch located in Ohtemachi, Chiyoda-ku, Tokyo; Simon Bunce as Representative in Japan ; staffed with approximately 700 employees including directors; hereinafter referred to as '' UBS Securities''), which found the following facts constituting violations of laws and regulations by UBS Securities.

2. Facts Found
  • State of insufficient internal control for the prevention of unfair trade by making use of undisclosed corporate information
      According to UBS securities, it has given instructions to its Compliance Department to provide in-house training programs on undisclosed corporate information to its employees and has set a policy of controlling the undisclosed corporate information strictly in accordance with its in-house rules in cases it has come to obtain such information, in order to prevent unfair trade. UBS securities also states, with regard to research analyst reports, that it controls information by means of establishing in the Equity Research Department an examination system that checks whether the undisclosed corporate information is contained or not in the reports.
      However, under the circumstances where the Head of the Equity Research Department and the Head of the Compliance Department have not taken appropriate measures to control the undisclosed corporate information, a researcher at the Equity Research Department, who obtained such information from a listed company with respect to the purchase of its own shares and the downward revision of the company's settlement of accounts, put the information in his research analyst report without being aware of the fact that the information concerned falls under the undisclosed corporate information. Moreover, the Publications Section in the Equity Research Department, being in charge of examining the report, failed to detect the descriptions in question. As the result, from April 2003 onward, UBS securities posted the research analyst report with the undisclosed corporate information on its website. The researcher explained the summary of the report at the in-house meetings and the Equity Research Department emailed the report to a large number of its customers. UBS securities has thus been conducting its business in such state recognized as having an insufficient internal control of undisclosed corporate information from the viewpoint of preventing unfair trade.

      The aforementioned act of UBS securities is acknowledged to fall under the act of conducting business under ''the state that a securities company is not deemed to have a sufficient degree of internal control for the prevention of unfair trade by making use of information pertaining to corporations, in the light of its control of information pertaining to corporations which it obtained'' provided for in Item (4), Article 10 of the Ordinance of Cabinet Office Concerning Regulation, etc. of Conducts of Securities Company as applied by Paragraph 25, Article 24 of Ordinance of Cabinet Office Foreign Securities Firms based on Item (2), Article 43 of Securities Exchange Law as applied by Paragraph 1, Article 14 of the Law on Foreign Securities Firms.

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