Nomura Faces Regulatory Action on Insider Information Leaks
Nomura Holdings Inc. (8604) may face “severe action” by Japanese regulators after employees of the country’s biggest securities firm leaked insider information, Financial Services Minister Tadahiro Matsushita said.
“It’s regrettable that information on public offerings was leaked to the sales department of the lead underwriter, which is supposed to strictly manage such information,” Matsushita said at a news conference today in Tokyo. He didn’t elaborate on the types of action the Financial Services Agency may take, saying it depends on the outcome of the investigation.
Nomura said last week that employees gave non-public information used for insider trading in 2010, acknowledging for the first time their role in cases being examined by regulators. The Securities Exchange and Surveillance Commission, the FSA’s watchdog arm, has since March recommended penalizing the companies that profited from the tips while stopping short of punishing the underwriters who provided them.
The investigation centers on trading of shares of Japanese companies before they announced equity offerings in 2010. Employees at Nomura, a manager of stock sales by Mizuho Financial Group Inc. (8411), Inpex Corp. and Tokyo Electric Power Co., provided information on the stock sales.
“Brokerages in general must hold a high standard of working ethics and comply with the laws and regulations because they handle highly confidential information,” said Matsushita, who was appointed as part of a Cabinet reshuffle last week.
Cooperating With Inspection
Nomura repeated its regret over the leaks today. “We continue to cooperate fully in the ongoing inspection by the commission,” the Tokyo-based bank said in a statement.
Shares of Nomura fell 2.2 percent to 265 yen on the Tokyo Stock Exchange today. They have retreated 36 percent since this year’s peak on March 19, two days before the SESC revealed the investigation.
The Japanese firm isn’t the only underwriter being probed. The SESC found that an employee of New York-based JPMorgan Chase & Co. gave information on a 2010 offering by Nippon Sheet Glass Co., according to two people with knowledge of the matter.
Nomura said on June 8 that it will complete an internal investigation by a group of outside lawyers by the end of June.
The bank will “implement improvement measures and disciplinary action” in accordance with the result of the review and the SESC’s inspection, it said. It chose Hideki Nakagome, a former High Court chief justice who helped investigate Olympus Corp.’s accounting fraud, to lead the internal probe.
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