Japan's Securities Regulator Recommends Punishment of SMFG's Nikko

Japan's securities watchdog on Wednesday recommended punishment of SMBC Nikko Securities, the brokerage unit of Sumitomo Mitsui Financial Group Inc (SMFG), over alleged market manipulation that led to the indictment of former executives.

The Securities and Exchange Surveillance Commission recommended that the Financial Service Agency impose an administrative punishment on Nikko after it found insufficient compliance had allowed the misconduct.

Such measures could typically entail temporary business suspensions or orders to improve internal controls, among other things.

The watchdog also said Nikko Securities and SMFG's banking unit shared customer information in violation of firewalls rules restricting such information sharing across banking and securities units within the same financial group.

Nikko Securities and six former executives have been indicted on market manipulation charges for its purchase of 10 individual stocks on the market, allegedly to push up their prices and ensure block trade deals in them did not fall through.

The company has said the revenue impact from the market manipulation was about 10 billion yen ($69.09 million) for the last financial year and likely to double in the current year through March as some institutional investors and companies suspended businesses.

SMFG and Nikko Securities issued a joint statement saying that they would take the recommendations seriously and make efforts to regain public trust.

Source: Reuters