SESC Latest Topics No.110 ＜April 2026＞

Recommendation for an administrative monetary penalty payment order against Wellco Holdings Corporation for making false statements in its disclosure documents. 

<Summary>
The Securities and Exchange Surveillance Commission (SESC) made a recommendation that the Prime Minister and the Commissioner of the Financial Services Agency impose an administrative monetary penalty order of 27,000,000 yen against Wellco Holdings Corporation (hereinafter, “the Company”). As a result of an inspection from a disclosure-regulation perspective, the SESC recognized that the Company made false statements in the Annual Securities Reports and Quarterly Reports that it submitted due to improper accounting treatment by the Company and the Company's consolidated subsidiary.

Recommendation based on Inspection Results for Yamabiko Investment Advisor Inc. 

As a result of the Kanto Local Finance Bureau's inspection of Yamabiko Investment Advisor Inc. (Investment Advisory and Agency Business Operator; hereinafter the "Company"), the following issues were identified: (i) the Company's officers and employees are complicit in unregistered investment advisory business conducted without registration by a de facto controller of the Company at a separate company; (ii) the Company had a person who met the requirements for refusal of registration conduct business as a key employee, and hid this from the authorities and submitted a false notification; and (iii) the Company did not secure officers and employees with sufficient knowledge and experience necessary for the execution of business related to financial instruments business, and it has not established a system necessary for conducting financial instruments business in an appropriate manner.

Therefore, on March 13, 2026, the SESC recommended that the Prime Minister and the Commissioner of the FSA take administrative actions.

Specifically, although the Company was aware of the content of investment advisory business conducted without registration by a de facto controller of the Company at a separate company, the Company participated in that unregistered investment advisory business without having any doubt about the content. In addition, the Company repeatedly engaged in concealment activities against the authorities. For example, the Company made one of its sales representatives engage in investment advisory business as a key employee of the Company despite its recognition that the sales representative met the requirements for refusal of registration, and it submitted false notifications to the authorities.

There is a serious lack of awareness of matters such as ensuring the appropriateness of the Company's business operations and awareness of legal compliance, and the representative directors, etc. of the Company do not have sufficient qualifications, etc. to be required for the fair and appropriate execution of the financial instruments business. In addition, despite the fact that it is difficult for the representative director of the Company to provide opinions to the Company’s de facto controller, the Company has not been able to establish an appropriate business management system, etc. of the Company under the leadership of the representative director, and the Company has not established a system to check and prevent legal violations and inappropriate business operations.