(Provisional Translation)
December 2, 2013
Securities and Exchange Surveillance Commission

Recommendation for Administrative Monetary Penalty Payment Order for Insider Trading by Nissay Asset Management Corporation


1. Contents of the Recommendation

The Securities and Exchange Surveillance Commission (“SESC”), today, made a recommendation to the Prime Minister and the Commissioner of the Financial Services Agency that an administrative monetary penalty payment order be issued in regard to an insider trading by Nissay Asset Management Corporation (“Nissay Asset”) pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency. This recommendation is based on the findings of the investigation into the insider trading, whereby the following violations of laws and ordinances were identified.

2. Summary of the Findings regarding Violations of the Laws and Ordinances

Nissay Asset was empowered to manage the assets in relation to its 33 clients and/or funds including, but, not limited to, Nissay Domestic Equity Active DB (Limited for Eligible Institutional Investors), Nissay Domestic Equity Mother Fund, Nissay Balanced Active Mother Fund and Nissay Japanese Equity Research Value Mother Fund, based on the discretionary investment management agreements and/or the investment trust agreements which Nissay Asset had entered into.

On June 28, 2010, Nissay Asset, through its employee X who was in charge of the investment management of the said assets as fund manager, was tipped by an employee A of a securities company the material information that the executive decision-making body of INPEX Corporation (“INPEX”) made a decision to launch a follow-on public offering of its shares, which at first another employee B of the said securities company had learnt through the negotiation of the underwriting agreement and which later the said employee A had learnt in the course of his duties, and, by June 30, 2010 at the latest, through its employee Y who was also in charge of the investment management of the said assets as fund manager, was tipped by the said employee X the said material information. Having been tipped as such, from June 29 to July 1, 2010, prior to the publication of the said material information on July 8, 2010, the said employees X and Y sold the shares of INPEX as the investment management based on the discretionary investment management agreements and/or the investment trust agreements mentioned above. Accordingly, on the accounts of its clients and/or funds, Nissay Asset sold a total of 1,574 shares of INPEX for 781,585,985 yen.

It was concluded that the conduct of Nissay Asset mentioned above constituted “a person has conducted 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 before the amendments by the Act No.86 of 2012 (“FIEA”).

3. Calculation of the Amount of the Administrative Monetary Penalty

Pursuant to the FIEA, the amount of the administrative monetary penalty applicable to the above violation is 410,000 yen.

Details of the calculation are presented in the Attachment.

4. Others

It had been reported to the SESC by the securities company mentioned in Section 2 above that this case was found in the course of its voluntary examination. The securities company has thereafter continued to cooperate with the SESC in its investigation.

Attachment

(1) Pursuant to Article 175(1)(iii) of the FIEA and to article 1-21 (1)(i) of the Cabinet Office Ordinance on Administrative Monetary Penalty Provided for in Chapter VI-II of the FIEA, a person who has, for the purpose of investing assets under management, engaged in transactions (“Violator”) specified under Article 175 (1)(iii) of the FIEA may be ordered to pay an administrative monetary penalty in the amount calculated as follows: (a) The total amount of money or other property paid or payable to the Violator as remuneration for the investment of the assets under management for the month in which the said transactions were executed (b) is multiplied by the highest value reached by the total amount of the issue included in the assets under management that was transacted during the period between the day on which the said transactions were executed and the last day of the month in which the said transactions were executed and (c) is then divided by the total value of the assets under management as of the last day of the month in which the said transactions were executed.

In this case, the transactions in question involved the investment management of assets of 31 clients and/or funds managed by the said employee X and 2 clients and/or funds managed by the said employee Y. Therefore, the administrative monetary penalty is calculated separately for each asset in relation to the said 33 clients and/or funds and added together to obtain the total amount of administrative monetary penalty payable.

Assets under management (A):

(a) 577,333 yen × (b) 11,799,000 yen ÷ (c) 1,942,429,765 yen
=3,506 yen

Assets under management (B):

(a) 1,796,667 yen × (b) 29,754,000 yen ÷ (c) 13,438,436,453 yen
=3,977yen

Assets under management (C):

(a) 7,179,000 yen × (b) 115,938,000yen÷ (c) 77,101,452,311yen
=10,795yen

Assets under management (D):

(a) 893,167yen × (b) 8,208,000yen÷ (c) 3,768,797,793yen
=1,945yen

Assets under management (E):

(a) 248,333 yen × (b) 1,539,000 yen÷ (c) 948,426,278 yen
=402 yen

Assets under management (F):

(a) 3,108,500 yen × (b) 74,385,000 yen÷ (c) 26,421,557,311 yen
=8,751 yen

Assets under management (G):

(a) 593,500 yen × (b) 4,104,000 yen ÷ (c) 2,013,369,140 yen
=1,209 yen

Assets under management (H):

(a) 387,500 yen × (b) 3,591,000 yen ÷ (c) 1,767,971,117 yen
=787 yen

Assets under management (I):

(a) 1,556,500 yen × (b) 9,747,000 yen ÷ (c) 8,454,120,455 yen
=1,794 yen

Assets under management (J):

(a) 1,565,500 yen × (b) 13,851,000 yen ÷ (c) 8,607,151,980 yen
=2,519 yen

Assets under management (K):

(a) 857,167 yen × (b) 6,669,000 yen ÷ (c) 3,429,301,579 yen
=1,666 yen

Assets under management (L):

(a) 1,426,833 yen × (b) 11,799,000 yen ÷ (c) 6,893,161,986 yen
=2,442 yen

Assets under management (M):

(a) 966,000 yen × (b) 6,669,000 yen ÷ (c) 4,071,491,850 yen
=1,582 yen

Assets under management (N):

(a) 883,833 yen × (b) 4,104,000 yen ÷ (c) 8,684,150,519 yen
=417 yen

Assets under management (O):

(a) 564,000 yen × (b) 4,104,000 yen ÷ (c) 1,871,273,913 yen
=1,236 yen

Assets under management (P):

(a) 588,333 yen × (b) 3,078,000 yen ÷  (c) 1,653,341,268 yen
=1,095 yen

Assets under management (Q):

(a) 1,161,833 yen × (b) 6,156,000 yen ÷ (c) 5,414,500,337 yen
=1,320 yen

Assets under management (R):

(a) 937,667 yen × (b) 7,182,000 yen ÷ (c) 3,937,783,273 yen
=1,710 yen

Assets under management (S):

(a) 941,667 yen × (b) 6,669,000 yen ÷ (c) 3,899,483,013 yen
=1,610 yen

Assets under management (T):

(a) 562,500 yen × (b) 3,591,000 yen ÷ (c) 1,808,588,029 yen
=1,116 yen

Assets under management (U):

(a) 756,000 yen × (b) 6,669,000 yen ÷ (c) 2,894,031,164 yen
=1,742 yen

Assets under management (V):

(a) 308,167 yen × (b) 3,078,000 yen ÷ (c) 1,230,566,807 yen
=770 yen

Assets under management (W):

(a) 5,061,833 yen × (b) 64,125,000 yen ÷ (c) 34,192,577,503 yen
=9,492 yen

Assets under management (X):

(a) 893,667 yen × (b) 7,695,000 yen ÷ (c) 3,542,615,451 yen
=1,941 yen

Assets under management (Y):

(a) 197,833 yen × (b) 3,078,000 yen ÷ (c) 1,385,959,085 yen
=439 yen

Assets under management (Z):

(a) 3,283,500 yen × (b) 56,430,000 yen ÷ (c) 35,031,570,397 yen
=5,289 yen

Assets under management (AA):

(a) 599,500 yen × (b) 3,591,000 yen ÷ (c) 2,061,783,142 yen
=1,044 yen

Assets under management (AB):

(a) 1,983,250 yen × (b) 235,980,000 yen ÷ (c) 24,270,765,308 yen
=19,282 yen

Assets under management (AC):

(a) 284,049 yen × (b) 63,612,000 yen ÷ (c) 11,922,143,800 yen
=1,515 yen

Assets under management (AD):

(a) 40,370,279 yen × (b) 130,815,000 yen ÷ (c) 23,676,752,937 yen
=223,047 yen

Assets under management (AE):

(a) 1,621,605 yen × (b) 26,163,000 yen ÷ (c) 20,819,804,328 yen
=2,037 yen

Assets under management (AF-1):

(a) 505,333 yen × (b) 19,246,500 yen ÷ (c) 1,344,971,128 yen
=7,231 yen

Assets under management (AF-2):

(a) 505,333 yen × (b) 34,008,000 yen ÷ (c) 1,359,200,210 yen
=12,643 yen

Assets under management (AG):

(a) 6,887,661 yen × (b) 26,155,500 yen ÷ (c) 2,339,760,573 yen
=76,995 yen

Total:

3,506 yen+3,977 yen+10,795 yen+1,945 yen+402 yen+8,751 yen+1,209 yen+787 yen+1,794 yen+2,519 yen+1,666 yen+2,442 yen+1,582 yen+417 yen+1,236 yen+1,095 yen+1,320 yen+1,710 yen+1,610 yen+1,116 yen+1,742 yen+770 yen+9,492 yen+1,941 yen+439 yen+5,289 yen+1,044 yen+19,282 yen+1,515 yen+223,047 yen+2,037 yen+7,231 yen+12,643 yen+76,995 yen=413,346 yen

(2) Pursuant to the provisions of Article 176(2) of the FIEA, the fraction less than ten thousand yen contained in (1) above shall be rounded down.

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