(Provisional Translation)
March 4, 2016
Securities and Exchange Surveillance Commission
Recommendation for Administrative Monetary Penalty Payment Order for Market Manipulation by Blue Sky Capital Management Pty Ltd
1. Contents of the Recommendation
The Securities and Exchange Surveillance Commission (the “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 market manipulation by Blue Sky Capital Management Pty Ltd (“Blue Sky”) 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 market manipulation, whereby the following violation of laws and ordinances was identified.
2. Summary of the Findings Regarding Violation of the Laws and Ordinances
Blue Sky is a proprietary company whose principal place of business is located in New South Wales, Australia. Pursuant to the investment management agreements entered into with relevant parties such as the general partner, Blue Sky has the authority to manage the assets invested in three funds: Blue Sky World L.P. and Blue Sky Japan L.P., both of which were formed in the Cayman Islands as a limited partnership, and MAH Capital Pty Limited, which was incorporated in Australia as a corporation. Blue Sky, through a person who engaged in securities trading, in relation to its business, as described in the Appendix, regarding shares of mixi, Inc., whose shares are listed on the Tokyo Stock Exchange Mothers Market, from 1:17:03 p.m. to 2:54:16 p.m. on June 17, 2014, with the purpose of inducing sales and purchases of other market participants, conducted transactions including the following: (i) decreasing prices by placing a series of large amounts of market sell orders and (ii) without intention to execute, placing a large amount of sell orders at prices above the best offers on the Tokyo Stock Exchange. Thus, in total, Blue Sky sold 166,300 shares and purchased 98,300 shares while placing sell orders (unexecuted) for 773,300 shares and purchase orders (unexecuted) for 18,800 shares on the accounts of the others. These constituted a series of sale and purchase and entrustments of securities that would mislead others into believing that sale and purchase of the shares were thriving and would cause fluctuations in the market of the shares.
The actions mentioned above conducted by Blue Sky were recognized as “a series of Sale and Purchase of Securities, etc.” and “Entrustment, etc.” conducted “in violation of Article 159(2)(i)” as stipulated under Article 174-2(1) of the Financial Instruments and Exchange Act (“FIEA”).
Summaries of the findings regarding the violation of the laws and ordinances are described in the Attachments 1 and 2.
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 7,440,000 yen.
Details of the calculation are presented in the Attachment 3.
4. Others
We appreciate assistance of the Australian Securities and Investments Commission in this matter.
(Attachment 1)
(Click to Enlarge Image)
(Attachment 2)
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(Attachment 3)
● Method of Calculation of the Amount of the Administrative Monetary Penalty
Pursuant to the provisions of Article 174-2(1)(ii)(d)(1) of the FIEA and Article 1-16(2) of the Cabinet Office Ordinance on Administrative Monetary Penalty Provided for in Chapter VI-II of the Financial Instruments and Exchange Act (the “COOAMP”), the amount of the administrative monetary penalty shall be calculated as follows:
(1)The total amount of money or the value of other property paid or payable to the Violator (Note 1), as consideration for the investment of the property for the month in which the Transactions Subject to Calculation (Note 2) were performed, is multiplied by three.
(Note 1)If a period serving as the basis of calculation of the investment fee (the “Investment Fee Calculation Period”) exceeds one month, the amount will be calculated: by dividing the investment fee by the number of the months in the Investment Fee Calculation Period; based on the investment performance of the month including the day when the Transactions Subject to Calculation were performed where the investment fee is calculated based on the investment performance in relation to the Investment Fee Calculation Period or by any other reasonable method (Article 1-16(2) of the COOAMP).
(Note 2)“Transactions Subject to Calculation” means transactions related to the act of violation pursuant to Article 174-2(1)(ii)(d) of the FIEA or the Sales, etc. of Securities or Purchase, etc. of Securities pertaining to the act of violation (Article 1-16(1)(i) of the COOAMP).
(2)Pursuant to the provisions of Article 176(2) of the FIEA, the fraction less than ten thousand yen of the amount calculated as in (1) above shall be rounded down.
In this case, the amount of the administrative monetary penalty is 7,440,000 yen.
(1)The total amount of money payable to the Violator as consideration for the investment for June 2014 is calculated to be 7,448,187 yen (Note 3).
(Note 3)The amount is calculated by multiplying US$24,488.13, the investment fee payable to the Violator for June 2014, by three and by 101.385, the dollar-yen exchange rate on June 30, 2014.
(2)The amount less than ten thousand yen (8,187 yen) is rounded down.
