SECURITIES AND EXCHANGE SURVEILLANCE COMMISSION

February 16, 2001

      The Securities and Exchange Surveillance Commission (SESC) conducted inspections of UBS Warburg Securities (Japan) Limited, Tokyo Branch (UBS Securities) and Commerz Securities (Japan) Company Limited, Tokyo Branch (Commerz Securities), based on provisions of the Law on Foreign Securities Firms (LFSF), and found legal violations by employees of the both companies as described below.

      Today, the SESC sent recommendations to the Prime Minister and the Commissioner of Financial Services Agency (FSA) to take appropriate actions pursuant to Article 20(1) of the FSA Establishment Law.

   Act of making a series of securities transactions to create artificial market prices which does not reflect the actual state of the market

1.    UBS Securities
      In relation to an Equity Exchangeable Bond (EB) for stocks of a listed company, for the purpose of lowering the stock price, an equities trader sold the stocks by placing a series of lower limit or no limit orders from 14:59 until the close on May 10, 2000. In fact whether additional interests (bonus coupon) of the EB were payable was dependent upon the stock price on the very date of May 10, 2000. As a consequence of the deliberate selling, the stock price fell short of the benchmark price for additional interests, and the payment worth approximately 70 million-yen could be avoided.
   
      
2.    Commerz Securities
      In relation to another EB for stocks of a listed company, for the purpose of lowering the stock price, equities traders sold the stocks by placing a series of lower limit orders from 14:58 until the close on August 15, 2000. In fact whether additional interests (bonus coupon) of the EB were payable was dependent upon the stock price on the very date of August 15, 2000. As a consequence of the deliberate selling, the stock price fell short of the benchmark price for additional interests, and the payment worth approximately 77 million-yen could be avoided.

(Violation of a Ministerial Ordinance, Article 42(1)(ix) of the Security and Exchange Law including the application of Article 14(1) of the LFSF)