SMBC Nikko Securities slapped with ¥700 million fine for stock price manipulation

The Tokyo District Court on Monday fined SMBC Nikko Securities ¥700 million yen and an additional fine of about  billion yen for stock price manipulation. 

A court presided over by judge Daisuke Kanda also sentenced former director of SMBC Nikko  Teruya Sugino (57) to 18 months in prison, suspended for three years, for violating the Financial Instruments and Exchange Law. The prosecutors demanded a fine of ¥1 billion and about ¥4.4 billion yen in additional fines for  Sumitomo Mitsui Financial Group’s brokerage unit, and an 18-month prison sentence  without parole for Sugino. 

A total of six people were prosecuted for suspected market manipulation, with Sugino and SMBC Nikko pleading guilty. 

 After finding in  a total of 10 questions that several managers of SMBC Nikko engaged in illegal price manipulation, the judge said: “As market gatekeepers, they could ensure the fairness of transactions and the protection of investors, so they can also ensure. the level of the entrepreneur’s investment. The sentence is even higher.” 

He pointed out that the so-called blockchain system, where brokerage houses buy large amounts of shares from major shareholders and sell them to investors after hours, has a structural problem that encourages investors to sell short. 

 “Although effective countermeasures were not implemented, crimes were repeatedly committed and immediate profit was the priority,” Kanda said. According to the judge, approximately ¥billion was used to stabilize stock prices, resulting in a profit of nearly ¥1.1 billion. 

“The function of (SMBC Nikko) to control and prevent illegal acts has lost its substance, and there were deep-rooted problems in the company’s culture, so the company is very responsible for neglecting its control duties,” said the judge of the  criminal of the company proceedings responsibility”.

The court also took into account the fact that SMBC Nikko had taken steps to prevent this from happening again and that  the Financial Services Agency had imposed a trading suspension order and a ¥300 million fine from the Tokyo Stock Exchange. 

According to the order, Sugino, among others, contracted with  a subordinate – Makoto Yamada, 45, former head of the capital division of SMBC Nikko – to order in December 2019 to buy 320,000 shares of Koito Manufacturing with funds from the securities company to support the a car . to the industry. stock price of the lamp manufacturer. The transaction was made in connection with block offering transactions. 

In the approximately 16 months of that month,  defendants are believed to have placed purchase orders totaling approximately 1.67 million shares in 10 issues  to stabilize their market prices. 

SMBC Nikko was charged under the so-called double liability rule, which holds an employer liable for the wrongful acts of its employees. 

SMBC Nikko issued a statement on Monday apologizing for the incident and saying  it takes the decisions seriously and will “constantly implement corrective measures and prevent recurrence  to restore trust.” 

 “It is very unfortunate that unfair business practices were carried out,” Prime Minister Hirokazu Matsuno said  at a press conference on Monday. 

 “I want (SMBC Nikko) to continue working to improve its operations significantly,” said a top government spokesman. 


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