Nomura Holdings Inc. has said that information on its corporate clients was leaked by an employee to a securities firm, little more than a year after it was admonished by the nation’s financial regulator for lax controls.
An internal investigation found that data on 275 companies, mainly financial institutions, was leaked to Nippon Institutional Securities Co., Nomura said Thursday in a statement. The leak included information on dealings in exchange-traded funds (ETFs) and transactions with Nomura's domestic brokerage arm.
The worker shared the information at the behest of a former Nomura staff member who is now employed by Nippon Institutional Securities, a unit of Nikko Asset Management Co., Nomura said.
The incident is an early test for Kentaro Okuda, who became chief executive officer at Japan’s biggest brokerage in April. It follows a scandal last year over an information leak that prompted the Financial Services Agency to order compliance improvements and led bond issuers to drop the company from underwriting deals.
Nomura apologized for the latest case and pledged to strengthen its management of customer information. It will consider taking actions including legal measures, it said in the statement.
Nippon Institutional said a sales manager at the firm received client information from Nomura on multiple occasions between January and July of this year. The manager, a former Nomura worker who joined the firm last October, shared the data with two subordinates but there’s no evidence it was divulged further, it said in a statement.
The current Nomura employee printed out information on clients and passed it to the former colleague, people familiar with the matter said, asking not to be identified as the information was private. Both had worked together in a team within the global markets department that planned ETF products, one of the people said.
An FSA official said the agency was aware of Nomura’s statement but declined to comment on the possibility of any administrative action. It is important for securities companies to appropriately manage information in order to maintain public trust, the official said, asking not to be identified in accordance with its policy.
The incident shows that Nomura must do more to make staff aware of the need to safeguard information, said Hironari Nozaki, a Toyo University professor.
"There is room to review their organizational efforts to make employees more mindful of compliance,” said Nozaki, a former Citigroup Inc. bank analyst.
Shares in Nomura had closed 1.2 percent higher before the announcement, paring this year’s decline to 4.2 percent.
Last year’s issue involved the improper sharing of information on potential changes to the composition of the Tokyo Stock Exchange with institutional investors. Okuda’s predecessor Koji Nagai, who is now chairman, faced a backlash from investors following the revelations and was forced to take a pay cut.
The business improvement order that ensued was the first for Nomura since 2012, when the company was embroiled in an insider-trading scandal that led to the then CEO’s resignation.