The government ordered Nomura Holdings Inc. and its core securities unit Tuesday to improve business management compliance after the company admitted last week that insufficient internal controls led to the leakage of confidential information about the Tokyo Stock Exchange’s new section plan to clients.
The Financial Services Agency imposed the action on Nomura Holdings and Nomura Securities Co., saying in a release that the conduct by Nomura employees did not violate laws and regulations but “is likely to impair and undermine the credibility … of capital markets significantly.”
A similar administrative action was taken against Nomura Securities in 2012 when the brokerage leaked nonpublic information about new share offerings by large companies to clients.
Nomura Holdings said Friday that a probe found information had been leaked, and CEO Koji Nagai and other executives will return up to 30 percent of their monthly remuneration for up to three months to take responsibility.
A probe by outside lawyers found a researcher at Nomura Research Institute leaked information that new listing and delisting criteria for the TSE upper section in terms of market capitalization would likely be set at ¥25 billion ($228 million) or more to a strategist at Nomura Securities in March.
The researcher was a member of a TSE panel tasked with discussing the criteria and other matters related to the bourse’s plan. The strategist then revealed that information to institutional investors via other employees.
“We will further strengthen our compliance and internal controls frameworks. We are committed to preventing a recurrence and will work toward regaining trust,” Nomura CEO Nagai said in a statement.
The FSA recognized a flaw in Nomura’s internal control because it was unable to prevent the information leak.
The FSA ordered Nomura to submit a business improvement plan, which will include steps to clarify the management’s responsibilities and preventive measures, by June 4.