Reshuffle may lead to lighter penalties over insider trading

Kyodo

The government on Friday welcomed the management reshuffle at Nomura Holdings Inc., expressing hope that Japan’s biggest investment bank will improve discipline among its employees.

Financial regulators are widely thought to be preparing some form of punishment for Nomura Securities Co., the group’s brokerage arm, over an insider trading scandal. But the departure of senior officials could result in a less severe penalty than previously expected, officials said.

“We hope a reborn Nomura will make a fresh start,” financial services minister Tadahiro Matsushita told reporters after Nomura Holdings CEO Kenichi Watanabe announced Thursday that he will step down together with the company’s chief operating officer. Matsushita said the scandal had created “a sense of distrust” among investors, but that the management reshuffle will help “draw a clear line.”

Regulators this year have investigated a series of leaks of insider information at major brokerages in relation to new share issues. Industry leader Nomura has apologized for three cases of insider trading that recently came to light, suspended come of its business operations and cut executives’ salaries. In its latest report issued Thursday, the company said some additional information leaks had been uncovered, prompting Matsushita to say that the government “will respond appropriately if problems are confirmed.”

The Securities and Exchange Surveillance Commission is likely to recommend soon that the Financial Services Agency punish the company for its failure to implement sufficient internal controls, officials said.

But Nomura is now expected to avoid such harsh penalties as a business suspension order, since its executives have taken responsibility. The scandal involved new share offers in which Nomura was a lead manager for companies including Mizuho Financial Group Inc. and Inpex Corp.