Press Release

July 15, 1997

The Securities and Exchange Surveillance Commission (SESC) conducted the investigation of Nomura Securities Co. (Nomura) on the charge of loss compensation that is prohibited by Securities and Exchange Law (SEL), and found legal violations and improper activities described below.

against Nomura and other appropriate measures, pursuant to Article 19(1) of Ministry of Finance Establishment Law on July 15, 1997.

1.Providing property gains to compensate for losses Nomura, by involvement of the president, two board members, and a director of the division, for the purpose of compensating for a part of a customer's losses incurred in securities trading, offered to the customer:

1)approximately \47,500,000 in total by disguising its own five equity-buying transactions between January 1995 and July 1995 as the customer's transations;

2)approximately \2,200,000 in March 1995, by disguising as if the customer had bought the profitable warrants which Nomura held on its own account at the old price and repurchasing them immediately at the current price on Nomura's own account; and

3)\320,000,000 in March 1995 by providing that amount of cash.(violation of SEL 50-31)3).

2.Entering into an agreement to make discretionary trading account From February 1989 to July 1996, Nomura entered into agreements with the customer that gave Nomura discretionary powers for aspects of share trading transactions to decide, without consulting the customer, whether to purchase or sell, shares issued, number of shares and prices, and executed the customer's order based on this agreement. Making such contracts after January 1992 violates SEL Articles 50 1)3).

3. Problems with internal controls

The SESC recognized the following problems with Nomura's internal controls underlying legal violations mentioned above:

1)In providing loss compensation and executing discretionary trading, officers and employees in several divisions were involved in such improper activities as making false order slip:

2)The officers responsible for internal controls and business activities inrelevant divisions failed to properly recognize long-lasting and frequent discretionary trading account transactions, and to give proper discretion and supervision concerning customer management. The Compliance and Guidance Department at Nomura did not adopt appropriate measures as well; and

3)In the SESC's investigation, the officers in the trading compliance and administration department, whose responsibility was to investigate questionable transactions, along with the officials and employees involved in the loss compensation, did inappropriate operations so that the truth would not be easily revealed.

activities were not mindful of compliance with laws and rules at all, and that there was serious defect with internal control system of Nomura.