FSA Minister Matsushita on the Nomura Insider Trading Scandal

(See at the bottom: However, the most important thing is that the companies and people concerned should recognize their own governance, responsibilities, their own positions and their own jobs. I would like to stress that I am concerned that there are serious problems in that respect.)

Q. Yesterday, an executive officer of SMBC Nikko Securities Inc. was arrested on charges of engaging in insider trading in violation of the Financial Instruments and Exchange Act. Although criminal investigation had already been launched in this case, could you comment on it once again following the arrest?

A. This case is very regrettable. It is just three weeks since I took office as the minister for financial services. Over this period, this case has continuously been mentioned, whether in the Diet or at press conferences. I am very interested in the background to this case. I feel great regret at a corporate governance problem like this, in which sensitive information held by a select group of people is used to generate illegal profits.

From the perspective of preventing unfair trading, such as insider trading, securities companies must strictly manage corporate information related to public offering of new shares. I would like securities companies to perform their duties properly. I would also like them to develop effective internal control systems. Moreover, they must conduct business with a high level of compliance awareness and professional ethics. If a problem is recognized regarding this securities company's business operation, the Financial Services Agency (FSA) will take strict action in accordance with laws and regulations. We will appropriately deal with this case.

Q. We have seen a series of insider trading cases involving Japanese securities companies, such as SMBC Nikko Securities and Nomura Securities Company, which have considerably shaken confidence in the market. As the minister for financial services, how do you intend to restore confidence in the whole market? Do you have any message you would like to send to the management teams of securities companies?

A. Over the three weeks since I took office, these insider trading cases have continuously been mentioned, whether in the Diet, at press conferences or during talks with my colleagues. I have been surprised by these cases myself. As I mentioned earlier, it is natural for securities companies to prevent unfair trading, such as insider trading. This problem concerns the fundamentals of governance, so I would like securities companies to strictly manage corporate information, develop effective internal control systems and conduct business with a high level of compliance awareness and professional ethics. I would like them to perform their duties properly. That is what I would like to stress.

Q. Given that several insider trading cases occurred in succession, it has been pointed out that it may be difficult to prevent this problem through efforts by securities companies alone and that a new fundamental reform may be necessary. What would you say to that?

A. The FSA is also considering various measures. We will consider and work out necessary measures after checking and sorting out facts related to the succession of insider trading cases.

However, the most important thing is that the companies and people concerned should recognize their own governance, responsibilities, their own positions and their own jobs. I would like to stress that I am concerned that there are serious problems in that respect.


http://www.fsa.go.jp/en/conference/minister/2012/20120626.html

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