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Japan’s Nomura gets light sanction over leaks

A man walks out from a Nomura Securities branch in Tokyo.


Japan's Financial Services Agency has ordered Nomura to improve its operations after the brokerage was found to be involved in a string of insider trading cases.

Tadahiro Matsushita, financial services minister, on Friday said the FSA had issued Nomura, Japan's largest underwriter of equity deals, with a business improvement order.

"We strongly hope that the company prepares to carry out a fundamental review of its internal systems under the new leadership, while pushing forward the reforms," Mr Matsushita said at a press conference.

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Nomura's second business improvement order in four years comes after Kenichi Watanabe, chief executive, and other senior managers resigned last week to take responsibility for the scandal, which has cost the company equity and bond business.

Earlier this week, the Securities and Exchange Surveillance Commission, Japan's securities watchdog, told the FSA to take action against Nomura after finding evidence that the brokerage solicited clients by giving them privileged information on companies while failing to prevent leakage in public deals.

"We take the SESC's recommendation seriously and will further enhance and reinforce our internal control structure to regain the trust of the public," Nomura said on Tuesday.

The SESC investigation into the scandal, which has shaken investor confidence in the integrity of Japan's capital markets, was triggered by widespread complaints that shares in companies preparing to issue new stock in 2010 regularly fell ahead of official announcements. The probe found that Nomura employees provided tip-offs during the 2010 public offerings of Mizuho, Inpex and Tokyo Electric Power.

A Nomura spokesperson declined to comment on Friday.

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