March 23, 2012
Securities and Exchange Surveillance Commission
Pursuant to Article 20, paragraph (1) of the Act for Establishment of the Financial Services Agency (FSA), on March 22, 2012, the Securities and Exchange Surveillance Commission (SESC) issued a recommendation that the Prime Minister and the Commissioner of the FSA shall take administrative action against ITM Securities Co., Ltd.* (hereinafter referred to as the "Company"). This recommendation is based on the findings of the inspection of the Company, whereby the following violations of laws and regulations by the Company were identified.
|President and CEO:
|1,590 million JPY
|Number of officers and employees:
|Type I financial instruments business
- Selling beneficiary certificates of foreign investment trusts and providing the net asset values, etc. thereof, while recognizing that said net asset values, etc. are or are likely to be false
It was recognized that, with regard to the beneficiary certificates of the foreign investment trusts it sells, the Company, while recognizing that the net asset values, etc. provided by the management company of said foreign investment trusts and by the investment management business operator which substantially controls the Company were, or were likely to be, false and incongruous with the actual status, has sold said beneficiary certificates without carrying out any effective verification, and has provided false net asset values and reported investment income, etc. based thereon to its customers, since September 2003 at the latest.
The Company's conduct of selling the beneficiary certificates of foreign investment trusts under such circumstances corresponds to an act of providing customers with false information concerning the conclusion of a contract for a financial instruments transaction or solicitation thereof. Therefore, the SESC recognizes that the above conduct falls under Article 38, item (i) of the Financial Instruments and Exchange Act (such conduct committed on or before September 29, 2007, falls under Article 4, item (i) of the Cabinet Office Ordinance on Regulation of Acts of Securities Companies (Ordinance of the Ministry of Finance No. 60 of 1965) based on Article 42, paragraph (1), item (x) (item (ix) in the case where such conduct was committed on or before March 31, 2005) of the former Securities and Exchange Act).
In addition, given that the Company's above-mentioned conduct (i) has played an extremely important role (a) in the operation or maintenance of the scheme for malicious calculation of false net asset values by the investment management business operator which substantially controls the Company and (b) in the evasion of the detection of this conduct for a long period of time, and (ii) has caused serious damage to pension funds, etc., which make up most of the Company's customers, the SESC recognizes that the Company conducted a wrongful act or extremely unjust act with regard to financial instruments business, and that the circumstances were especially serious.