Nomura to Punish Tipsters as Japan FSA Signals End to Crackdown

Nomura to Punish Tipsters as Japan FSA Signals End to Crackdown

Nomura Holdings Inc. (8604) said employees who leaked insider information on client transactions three years ago will be punished as the regulator signals an end to a crackdown that roiled Japan’s largest brokerage last year. Nomura will take “strict action” against the two employees who gave confidential data to three asset management firms, Kenji Yamashita, a spokesman in Tokyo, said yesterday, without giving details. Japan’s securities watchdog recommended fining the funds, including a unit of Nippon Life Insurance Co., for trading on the tips. JPMorgan Chase & Co. (JPM) also said yesterday that a former employee leaked information in 2010.The Financial Services Agency ordered Nomura to improve compliance last year and the Tokyo-based bank’s top two executives resigned after staff leaked information on share sales it managed. The scandal prompted the FSA to propose stiffer penalties for tipsters, including prison, to restore confidence in local markets that have rebounded this year.

“Strong punishments will probably be required to avoid any more leaks,” said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management Co. in Tokyo. “Brokerages operating in Japan have been strengthening internal controls for insider trading,” he said, predicting little impact on Japan’s financial markets from the latest revelations.

The findings close the chapter on the regulator’s probe into insider trading connected to public share offerings, an FSA official said at a news briefing yesterday, asking not to be named in accordance with the agency’s policy. At the same time, the FSA ordered Nomura to submit a report by early next month on the effectiveness of measures the firm has implemented since 2012 to prevent further leaks, the official said.

Fired Employees

Nomura penalized 17 employees for information leaks last year, with punishments including dismissal, Yamashita said by telephone. The firm will act against the two employees in accordance with its internal rules, he said, while declining to identify the people.

Shares of Nomura fell 0.5 percent to 807 yen yesterday before the news on the leaks. The stock has jumped 60 percent this year and the Nikkei 225 Stock Average (NKY) has climbed 51 percent, the best performance among major developed markets.

JPMorgan, the biggest U.S. bank by assets, said a former employee leaked details on a share sale it was managing for Nippon Sheet Glass Co. (5202) in 2010. The bank discovered the person’s role during an investigation last year and reported it to the authorities, it said in a statement yesterday. The person was punished and has left the company, it said.

Nissay Fine

Japan’s Securities and Exchange Surveillance Commission recommended a 410,000 yen ($4,000) fine against Nissay Asset Management Corp. after finding that employees sold shares of Inpex Corp. (1605) based on information received from Nomura, an underwriter of the energy company’s share sale in 2010.

Nissay Asset, a unit of Nippon Life, Japan’s largest life insurer, apologized for the incident. The asset manager is cooperating with the SESC and conducting its own probe, it said in a statement yesterday.

The other two fund managers facing fines for acting on tips from Nomura are Stats Investment Management Co. and Finnowave Investments Inc. The SESC also recommended fining MAM Pte for trading using information from JPMorgan.

Finnowave Chief Executive Officer Hideki Wakabayashi apologized in a statement on the Tokyo-based company’s website, saying actions by a former executive were very regrettable.

A person who asked not to be identified at Stats Investment in Tokyo declined to comment when contacted by phone. A call to Singapore-based MAM after regular office hours was answered by a person who declined to comment.

To contact the reporter on this story: Takahiko Hyuga in Tokyo at

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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