SESC Latest Topics No.100＜August 2024＞

Recommendation for Administrative Disciplinary Action against F-Port. Inc.

<Summary>
 The SESC recommended that the Prime Minister and the Commissioner of the FSA take administrative disciplinary action against F-Port. Inc. (hereinafter "the Company"), an Investment Advisor/Agency.

 This recommendation is based on the findings of an inspection of the Company whereby the Director-General of the Shikoku Local Finance Bureau identified that the Company had (i) provided customers with false information in connection with the conclusion or solicitation of financial instrument transaction contracts, and (ii) failed to establish the necessary system and a sufficient personnel structure to appropriately perform Investment Advisor/Agency duties.

 Specifically, the Company solicited investment advisory contracts by telling its clients that (i) the Company's advisor had made transactions or profits exceeding 100 million yen, although there was no such fact, (ii) the Company had accurately predicted a rapid short-term increase in the prices of certain stocks, although the Company had never provided advice on those stocks, and (iii) if trades had been carried out in accordance with the Company’s previous advice, the maximum loss rate would be 12%, although the real figure would be 46.2%, .

 In addition, the Company's compliance officer was not actively involved in the operation of the Company, and the Company's officers and employees, including the internal administrator, were performing their duties as instructed by the beneficial owner. Thus, the Company did not have a system to check and prevent acts conducted in violation of a law or regulation or inappropriate business operatins.

Petition for a court injunction against Global Investment Lab Inc. and its manager and key members.

<Summary>
 Based on investigations of Global Investment Lab INC. (hereinafter “GIL”), the SESC identified that GIL, ITO Ryo (hereinafter “ITO”), the Representative Director of GIL, and YAMADA Takeho (hereinafter “YAMADA”) and KURIHARA Toshimasa (hereinafter “KURIHARA”), key members of GIL, had solicited shares in collective investment schemes that are subject to foreign laws, without statutory registration.

 Specifically, under the management and instructions by GIL, the sales agents registered with GIL, including ITO, YAMADA, and KURIHARA, solicited investments into STERLING HOUSE TRUST Series 7 Greenback Program (Sterling House Trust), an overseas financial product established by STERLING HOUSE GROUP LTD, an overseas corporation, by telling retail investors about the financial product’s outline and advantages. For those who wanted to invest, the sales agents supported administrative procedures, such as the conclusion of contracts.

 As a result, between March 2015 and May 2024, approximately 19,900 retail investors invested a total of approximately 80.6 billion yen.

 The SESC filed a petition with the Tokyo District Court to issue an order against GIL, ITO, YAMADA and KURIHARA, prohibiting and suspending the aforementioned activities conducted in violation of the Financial Instruments and Exchange Act.