Nomura admits leaking info on TSE listing criteria review

May 25, 2019

Tokyo--Japanese brokerage giant Nomura Holdings Inc. <8604> on Friday admitted leaking information regarding the Tokyo Stock Exchange's review of its listing criteria.

Nomura announced the misconduct in a report detailing the results of an in-house investigation of the matter.

Koji Nagai, group chief executive officer of the holding company, will have his pay cut by 30 pct for three months to take responsibility for the incident. Pay will also be reduced, by 10 pct or 20 pct for two months or three months, for six other Nomura group officials, including executives of key subsidiary Nomura Securities Co.

A researcher of the Nomura Research Institute, who was involved in the case, also faced in-house punishment.

"I deeply apologize for causing trouble and concern to our customers and other people and parties concerned," Nagai told a press conference in Tokyo.

Nagai said he will not resign from the group CEO post, noting that the group clarified its responsibility for the misconduct with the penalties for the executives including himself. Nomura will make group-wide efforts to regain trust, he added.

The Financial Services Agency plans to issue a business improvement order to Nomura Holdings and Nomura Securities within this month based on the financial instruments and exchange law.

The FSA imposed a business improvement order to Nomura Securities in 2012 for leaking important undisclosed information about listed companies' public share placement plans. The information leak led to insider trading.

According to the report, the NRI researcher, who was a member of the TSE's panel discussing issues related to a review of the exchange's listing criteria, sent to a chief strategist at Nomura Securities' research division an email saying that there is "a high chance" of the listing and delisting threshold being set at 25 billion yen or more in terms of market capitalization.

The strategist sent the information to 3,000 domestic and 2,000 overseas institutional investors by email.

Some Nomura group marketing employees who obtained the information from the chief strategist provided it to dozens of client companies.

A change in listing and delisting criteria is important information that could affect the stock prices of companies around the borderline.

At the press conference, Noriaki Shimazaki, head of Nomura Holdings' audit committee, criticized the information leak, saying that the behavior "seriously lacked consideration to the fairness of the market."

The investigation report said that the NRI researcher's supply of the information to the Nomura Securities strategist "can be regarded as a breach of confidentiality" owed to the TSE.

The spread of the information by the Nomura Securities strategist was "an act lacking the basic code of conduct as a market player," it also said.

Nomura Holdings said that it will thoroughly strengthen its information management system and code of conduct, and review its corporate structure and evaluation system, in order to prevent similar irregularities. Jiji Press