(Provisional Translation)
June 8, 2012
Securities and Exchange Surveillance Commission
Pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency (FSA), on June 8, 2012, the Securities and Exchange Surveillance Commission (SESC) made a recommendation that the Prime Minister and the Commissioner of FSA shall issue administrative monetary penalty order. This recommendation is based on the findings of the inspection of insider trading by recipient of information from an employee of a company in negotiations of a contract with TEPCO. The inspection identified the following violations of laws and ordinances.
(1) Whereas First New York Securities L.L.C. (hereinafter "the Company") is a securities company registered with the United States Securities and Exchange Commission, a trader of the Company engaged in management of the assets of the Company received information from Employee A of a securities company negotiating a securities underwriting agreement with TEPCO indicating that a decision had been made by the executive decision-making body of TEPCO to launch a public offering of its stocks. This information had been gained by Employee A in the course of his/her duties and through Employee B and others of the same securities company who were informed of the negotiations. Whereas this information was announced at 3:50 p.m. on September 29, 2010, the Company acted prior to the announcement to sell a total of 35,000 shares of TEPCO on the Company's own account on September 28, 2010, for the total amount of 80,518,900 yen.
This act of the Company was recognized as falling under the definition of having "conducted, on his/her own account, Sales and Purchase, etc. set forth in Article 166(1) in violation of the provisions of Article 166(1) or (3)" as stipulated under Article 175(1) of the Financial Instruments and Exchange Act.
(2) The person to be named in the Administrative Monetary Penalty Payment Order (hereinafter "Individual X") received information from Employee A of a securities company negotiating a securities underwriting agreement with TEPCO indicating that a decision had been made by the executive decision-making body of TEPCO to launch a public offering of its stocks. This information had been gained by Employee A in the course of his/her duties and through Employee B and others of the same securities company who were informed of the negotiations. Whereas this information was announced at 3:50 p.m. on September 29, 2010, Individual X acted prior to the announcement to sell a total of 200 shares of TEPCO on the individual's own account during the period from September 27 to September 29, 2010, for the total amount of 443,100 yen.
This act of Individual X was recognized as falling under the definition of having "conducted, on his/her own account, Sales and Purchase, etc. set forth in Article 166(1) in violation of the provisions of Article 166(1) or (3)" as stipulated under Article 175(1) of the Financial Instruments and Exchange Act.
Pursuant to the Financial Instruments and Exchange Act, the amounts of administrative monetary penalty applicable to the above violations are as follows:
First New York Securities L.L.C.: 14,680,000 yen
Individual X: 60,000 yen
Details of the calculation are presented in the Attachment.
(1) Pursuant to the Article 175(1) of the Financial Instruments and Exchange Act, the amounts of administrative monetary penalties are calculated as follows:
(Selling price) × (Number of shares sold) - (The lowest price of shares during the two weeks after the publication of material fact) × (Number of shares sold)
As the lowest price for the shares of TEPCO marked during the two-week period following the publication of the material fact was 1,881 yen per share marked on October 13, 2010, the amount of administrative monetary penalty are as shown below:
(a) For First New York Securities L.L.C.
(2,291 yen × 5,000 shares + 2,301 yen × 5,000 shares + 2,302 yen × 20,000 shares + 2,303 yen × 1,100 shares + 2,304 yen × 3,900 shares) - (1,881 yen × 35,000 shares)
= 14,683,900 yen
→ As fractions of less than ten thousand yen shall be rounded down, the final amount comes to 14,680,000 yen
(b) For Individual X
(2,336 yen × 100 shares + 2,095 yen × 100 shares) - (1,881 yen × 200 shares) = 66,900 yen
→ As fractions of less than ten thousand yen shall be rounded down, the final amount comes to 60,000 yen
(2) Pursuant to the provisions of Article 176(2) of the Financial Instruments and Exchange Act, the fractions less than ten thousand yen contained in (1) above shall be rounded down.