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Nomura conducts internal probe amid report of information leak
[TOKYO] Nomura Holdings has conducted an internal investigation into improper handling of stock market information as Japan's financial regulator prepares to penalise the firm's domestic brokerage unit.
The Financial Services Agency (FSA) plans to issue a business improvement order against Nomura Securities as soon as this month after the leak of information on changes to the composition of the Tokyo Stock Exchange market segments, a person with knowledge of the matter said.
Information "was handled improperly from the viewpoint of ensuring fair and sound markets in the course of communicating information at Nomura Securities", the Tokyo-based firm said in a statement late Thursday.
"We will publish the findings of our investigation and details of a remediation action plan shortly."
Nomura Research Institute's Sadakazu Osaki, who was on a Tokyo Stock Exchange panel considering changes to the market segments, leaked information within the securities firm that was later shared with investors, according to the Nikkei newspaper, which reported earlier on the agency's planned action.
A business improvement order generally requires the subject to fix internal controls rather than pay fines. It would be the first such penalty for Nomura since 2012, when the FSA found that employees at Japan's biggest brokerage leaked information on equity offerings that was subsequently used for insider trading. The firm's chief executive officer at the time subsequently resigned.
While the FSA doesn't see the latest incident as amounting to insider trading, it determined that it undermined trust in the market, the Nikkei reported.
Investors shrugged off the news. Shares of Nomura rose 1.2 per cent at 10.42am in Tokyo on Friday, while the benchmark Topix dropped slightly.
Nomura Research Institute (NRI) gained 0.6 per cent. Nomura owns about 39 per cent of NRI, according to the research institute.
Yasuhiro Komatsu, a spokesman at NRI, said the company hasn't allowed Mr Osaki to speak publicly since the incident.
While the information he provided to Nomura Securities was all publicly available, his act was inappropriate, Mr Komatsu said.
FSA representatives weren't immediately able to comment when contacted by Bloomberg News.
Japan Exchange Group is considering changes that involve cutting the number of stock sections to three from four, amid criticism that there are too many. The bourse operator released a report in March that detailed feedback from investors, companies and brokerages on ways to revamp the sections.