Recommendations for Administrative Monetary Penalty Payment Order for Market Manipulation of shares of Ezaki Glico Co., Ltd. and three other companies by Caspian Trading Ltd. (formerly Celera Global Ltd.)
Japanese version
(Provisional Translation)
March 17, 2017
Securities and Exchange Surveillance Commission
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 Caspian Trading Ltd. (formerly Celera Global Ltd.) (“Celera”) pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency. This recommendation is based on the findings of an investigation into the market manipulation, whereby the following violation of laws and ordinances was identified.
2. Summary of the Findings Regarding Violation of Laws and Ordinances
Celera, having its registered office in Tortola, Virgin Islands, British, is a company which engages in generating earnings from stock trading and other businesses with its own funds. The SESC found that Celera, as described in the Attachment 1, through those who engage in its proprietary stock trading business, described as follows, with the purpose of inducing sales and purchases by other market participants of the following companies’ shares listed on the Tokyo Stock Exchange First Section Market, conducted the following transactions on the Tokyo Stock Exchange, etc.:
(1) With regard to shares of Ezaki Glico Co., Ltd., Celera, without intention to execute, placing multiple sell orders and made layers at prices above the best offer price, or placing multiple buy orders and made layers at prices below the best bid price, sold and purchased 234,900 shares, and made entrustments of sell orders of 2,088,900 shares and buy orders of 1,675,100 shares from 12:32 pm to 2:28 pm on December 8, 2014;
(2) With regard to shares of Kanamoto Co., Ltd., Celera, by the same way as (1), sold and purchased 158,400 shares, and made entrustments of sell orders of 657,600 shares and buy orders of 631,500 shares from 12:31 pm to 1:40 pm on December 8, 2014;
(3) With regard to shares of DENSO Corporation, Celera, by the same way as (1), sold 615,600 shares and purchased 616,300 shares, and made entrustments of sell orders of 1,583,300 shares and buy orders of 1,904,000 shares from 9:56 am to 2:12 pm on December 9, 2014; and
(4) With regard to shares of Daito Trust Construction Co., Ltd., Celera, by the same way as (1), sold 233,500 shares and purchased 233,900 shares, and made entrustments of sell orders of 2,336,400 shares and buy orders of 2,090,800 shares from 9:46 am and 2:47 pm on December 11, 2014.
These constituted a series of sale and purchase and entrustments of the above shares that would mislead other participants 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 Celera 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 laws and ordinances are described in the Attachment 1.
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 13,320,000 yen.
Details of the calculation are presented in the Attachment 2.
4. Others
We have investigated this matter based on various sources including information provided by the Japan Exchange Regulation (JPX-R).
Attachment 1
Attachment 2
● Method for Calculating the Amount of the Administrative Monetary Penalty
1. Pursuant to the provisions of Article 174-2(1) of the FIEA, the amount of the administrative monetary penalty shall be calculated as follows:
(1) Amount pertaining to a Matching Volume of Sale and Purchase (Note 1) pertaining to acts of violation: (Value pertaining to sale, etc. of securities on its own account) –(Value pertaining to purchase, etc. of securities on its own account)
(Note 1) Matching Volume of Sale and Purchase: The smaller of the number of securities sold, etc. and the number of securities purchased, etc. pertaining to acts of violation.
(2) Where the number of securities sold, etc. on its own account pertaining to acts of violation exceeds the number of securities purchased, etc. on its own account pertaining to acts of violation: (Value pertaining to sale, etc. of securities with respect to the excess transaction volume) – (The lowest prices as designated under Article 67-19 or Article 130 of the FIEA of the securities during a one-month period following the termination of acts of violation × the excess transaction volume)
or
Where the number of securities purchased, etc. on its own account pertaining to acts of violation exceeds the number of securities sold, etc. on its own account pertaining to acts of violation: (The highest prices as designated under Article 67-19 or Article 130 of the FIEA of the securities during a one-month period following the termination of acts of violation × the excess transaction volume) – (Value pertaining to purchase, etc. of securities with respect to the excess transaction volume)
and
(3) Pursuant to the provisions of Article 176(2) of the FIEA, any fraction less than ten thousand yen of a sum of the amounts calculated as in (1) and (2) above shall be rounded down.
2. In this case, the total amount of the administrative monetary penalty is 13,320,000 yen. This amount is based on the sum of the amounts calculated as in (1) to (4) below, the sum of which has been rounded down for the amount less than ten thousand yen pursuant to (3) above.
(Note 2) Details of the calculation are also given in Appendixes 2 to 5 (PDF).
(1) The amount of administrative monetary penalty related to the transaction of Ezaki Glico Co., Ltd. shares is calculated to be 3,070,000 yen.
Celera sold 234,900 shares and purchased 234,900 shares, and the value of those is 1,045,164,990 yen and 1,042,087,180 yen, respectively.
Thus, the amount of the administrative monetary penalty regarding the amount pertaining to a Matching Volume of Sale and Purchase is 3,077,810 yen: 1,045,164,990 yen - 1,042,087,180 yen
(2) The amount of administrative monetary penalty related to the transaction of Kanamoto Co., Ltd. shares is calculated to be 2,870,000 yen.
(i) Celera sold 158,500 shares (Note 3) and purchased 158,400 shares, therefore, the number of shares of a Matching Volume of Sale and Purchase is to be 158,400. The value of 158,400 shares that were sold and bought is 595,204,710 yen and 592,400,960 yen, respectively.
(Note 3) Amount pertaining to the sale, etc. of the securities on its own account includes 100 shares that were sold short on its account at the time of the commencement of the acts of violation and are deemed to have been sold at 3,710 yen, which was the share price at the time of the commencement of the acts of violation, pursuant to Article 174-2(7) of the FIEA and Article 33-12(i) of the Cabinet Office Ordinance of the FIEA.
Thus, the amount of the administrative monetary penalty regarding the amount pertaining to a Matching Volume of Sale and Purchase is 2,803,750 yen: 595,204,710 yen - 592,400,960 yen
(ii) The amount of the administrative monetary penalty regarding the excess transaction volume (100 [158,500 – 158,400] shares) where the amount pertaining to the sale of the securities exceeds the amount pertaining to the purchase of the securities is 75,300 yen: (Value pertaining to sale, etc. of securities with respect to the excess transaction volume) – (The lowest prices as designated under Article 67-19 or Article 130 of the FIEA of the securities during a one-month period following the termination of acts of violation × the excess transaction volume) = 375,300 yen – 300,000 yen (3,000 yen × 100shares)
(Note 4) The lowest price during a one-month period following the termination of acts of violation is 3,000 yen.
(3) The amount of administrative monetary penalty related to the transaction of DENSO Corporation shares is calculated to be 3,210,000 yen.
(i) Celera sold 615,600 shares and purchased 616,300 shares, therefore, the number of shares of a Matching Volume of Sale and Purchase is to be 615,600. The value of 615,600 shares that were sold and bought is 3,650,908,800 yen and 3,647,695,500 yen, respectively.
Thus, the amount of the administrative monetary penalty regarding the amount pertaining to a Matching Volume of Sale and Purchase is 3,213,300 yen: 3,650,908,800 yen – 3,647,695,500 yen
(ii) The amount of the administrative monetary penalty regarding the excess transaction volume (700 [616,300 – 615,600] shares) where the amount pertaining to the sale of the securities exceeds the amount pertaining to the purchase of the securities is 0 yen: (The highest prices as designated under Article 67-19 or Article 130 of the FIEA of the securities during a one-month period following the termination of acts of violation × the excess transaction volume) – (Value pertaining to purchase, etc. of securities with respect to the excess transaction volume) = 4,067,000 yen (5,810 yen × 700shares) – 4,136,300 yen)
(Note 5) The highest price during a one-month period following the termination of acts of violation is 5,810 yen.
(Note 6) Pursuant to the provisions of Article 174-2(1)(ii)(b) of the FIEA, in calculating the value for the amount exceeding the matching volume of sale and purchase, if the calculated number is less than 0, the solution has been replaced with 0.
(4) The amount of administrative monetary penalty related to the transaction of Daito Trust Construction Co., Ltd. shares is calculated to be 4,170,000 yen.
(i) Celera sold 233,500 shares and purchased 233,900 shares, therefore, the number of shares of a Matching Volume of Sale and Purchase is to be 233,500. The value of 233,500 shares that were sold and bought is 3,060,005,700 yen and 3,056,163,900 yen, respectively.
Thus, the amount of the administrative monetary penalty regarding the amount of pertaining to a Matching Volume of Sale and Purchase is 3,841,800 yen: 3,060,005,700 yen – 3,056,163,900 yen
(ii) The amount of the administrative monetary penalty regarding the excess transaction volume (400 shares) where the amount pertaining to the sale of the securities exceeds the amount pertaining to the purchase of the securities is 332,500 yen: (The highest prices as designated under Article 67-19 or Article 130 of the FIEA of the securities during a one-month period following the termination of acts of violation × the excess transaction volume) – (Value pertaining to purchase, etc. of securities with respect to the excess transaction volume) = 5,574,000 yen (13,935 yen × 400 shares) – 5,241,500 yen
(Note 7) The highest price during a one-month period following the termination of acts of violation is 13,935 yen.
[Reference: Examples of how to calculate the administrative monetary penalty]
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