Financial Services Agency

today, SMBC Nikko Co., Ltd. (Chiyoda-ku, Tokyo, corporation number 7010001125714. Below " SMBC Nikko "It's called. ) and Sumitomo Mitsui Financial Group, Inc. (Chiyoda-ku, Tokyo, corporate number 2010001081053; hereinafter referred to as “Sumitomo Mitsui Financial Group”). and ii. In addition to taking administrative action, Sumitomo Mitsui Banking Corporation (Chiyoda-ku, Tokyo, corporation number 5010001008813, hereinafter referred to as "Sumitomo Mitsui Banking Corporation") and Sumitomo Mitsui Financial Group will be subject to the following iii. I have issued a report request order as follows. i. SMBC Nikko administrative action against Reason for disposal SMBC Nikko As a result of the inspection by the Securities and Exchange Surveillance Commission, the following legal violations were recognized, and on September 28, 2022, a recommendation to seek administrative actionOpens in a new window was made. (1) Illegal purchases, etc. for the purpose of stabilizing the market price of listed stocks SMBC Nikko Regarding its business, regarding 10 listed stocks, the closing price, etc. on the day of bo execution, which is the basis for the trading price in "block offer" trading (hereinafter referred to as "bo"), fell significantly compared to the closing price on the previous day. and attempt to maintain the stock price at a certain level, violate the provisions of Article 20 of the Order for Enforcement of the Financial Instruments and Exchange Act, and purchase with a series of limit orders for the purpose of stabilizing the market price of each stock. made an offer to purchase (hereinafter referred to as the "Act"). The conduct of this case is recognized as a violation of Article 159, Paragraph 3 of the Financial Instruments and Exchange Law. In addition, this act SMBC Nikko , due to inadequate market surveillance systems to check and prevent unfair trading and inadequate business management systems to ensure thorough legal compliance and appropriate business operations. is recognized. (2) Inadequate market surveillance system SMBC Nikko teeth, SMBC Nikko Transactions extracted by the trading trend monitoring system (hereinafter referred to as the "system") will be screened according to certain standards. (including self-trading), according to the content of the transaction and the past transaction status of the customer, etc., such as interviews and alerts (hereinafter referred to as "measures") and Under these circumstances, 8 of the 10 issues in which this act was committed were extracted as transactions suspected of unfair trading in the system. SMBC Nikko The standards for taking measures are set for transactions that take place over multiple days. Not applicable. again, SMBC Nikko , for self-trading related to specific events such as block trades, regardless of whether or not it is extracted by the system, trade examination (hereinafter referred to as "event examination") is performed. However, bo is not subject to event screening, although there are risks similar to block trades, etc., such as the incentive to participate in the closing price in self-trading. For these reasons, no action was taken with respect to any of the transactions. From the situation above, SMBC Nikko This is based on Article 123, Paragraph 1, Item 12 of the Cabinet Office Ordinance on Financial Instruments Business, etc. based on the provisions of Article 40, Item 2 of the Financial Instruments and Exchange Act. recognized as applicable. In addition, the above situation SMBC Nikko In addition to insufficient awareness of the risks of self-trading, SMBC Nikko It is recognized that this is due to the management team's failure to upgrade the system and improve the trade surveillance system in line with the increase in the number of market surveillance cases. (3) Inadequate business management system for bo SMBC Nikko When executing the bo, we confirm in advance the purchase intention of the buyer customer, etc., but at that time, SMBC Nikko A considerable number of sales representatives provide explanations that buyers and customers can guess about the execution date of bo. Such a situation is recognized as one of the factors that induces short selling by giving opportunities to customers who intend to sell short on the day of the bo execution. SMBC Nikko From the stage of considering the introduction of the bo (2012), there was concern that short selling of the bo issue by buyers and customers would distort the price formation of the issue. Regarding the way of provision, etc. SMBC Nikko The bo work was started without proper discussion within the company. Also, after that SMBC Nikko In 2010, the stock price of the target issue actually fell on the day the bo was executed, and problems such as concerns about price formation were raised, but no effective countermeasures were taken. like above SMBC Nikko The business operation status related to bo may impair the fairness of the market. recognized as applicable. In addition, the above situation SMBC Nikko , prioritizing the promotion of their own business, SMBC Nikko Lack of awareness as a gatekeeper of the market, such as lack of awareness to improve the problems of bo, and effective measures such as appropriately understanding business risks and issues and reviewing product characteristics. This is due to the fact that the system for conducting the SMBC Nikko , it is recognized that there are deficiencies in the business management system to ensure appropriate business operations. (4) Inappropriate business operations in cooperation with banks Article 153, Paragraph 1, Item 7 of the Cabinet Office Ordinance on Financial Instruments Business, etc. based on Article 44-3, Paragraph 1, Item 4 of the Financial Instruments and Exchange Act , financial instruments business operators engaged in securities-related business (limited to those engaged in type 1 financial instruments business) shall, with respect to the provision of non-public information by said financial instruments business operator or its parent corporation, etc. or subsidiary corporation, etc., Unless there is prior written or electromagnetic record consent from the issuer, etc., the parent corporation, etc. or subsidiary corporation, etc. of the financial instruments business operator and non-disclosed information concerning the issuer, etc. shall not be received or provided. It is however, SMBC Nikko , while recognizing that the corporate customer has requested the suspension of information sharing or has not obtained consent to information sharing, between the parent company, Sumitomo Mitsui Banking Corporation, and the non-public information about the corporate customer is given and received multiple times, and this SMBC Nikko shared inside. (Case 1) With regard to the shares of listed company a, which were held by multiple corporations such as Sumitomo Mitsui Banking Corporation, regarding the non-public information regarding the sale of such shares, company a's officers themselves told Sumitomo Mitsui Banking Corporation, SMBC Nikko requested to stop providing information to however, SMBC Nikko Although officers and employees were aware of the request to stop the provision of information, in order to obtain a position as the lead manager in the secondary offering, the officers and employees did not disclose information regarding the timing, amount, method, etc. of the secondary offering to Sumitomo Mitsui Banking Corporation. received multiple times from SMBC Nikko After sharing it with the people concerned, I was planning a sales strategy. moreover, SMBC Nikko In the secondary offering, the executive officer of SMBC Nikko requested Sumitomo Mitsui Banking Corporation to work with Company A to acquire the position. (Case 2) SMBC Nikko and Sumitomo Mitsui Banking Corporation will each provide listed company b with information obtained through transactions with company b regarding the acquisition of company c by company b and the financing associated with the acquisition (hereinafter referred to as the "acquisition, etc."). Regarding, without obtaining prior consent from company b, SMBC Nikko and Sumitomo Mitsui Banking Corporation have pledged in writing that they will not share it. however, SMBC Nikko Although SMBC did not obtain prior consent from company b, officers and employees received non-disclosed information about the acquisition, etc. from SMBC on multiple occasions, and SMBC Nikko It was shared with insiders. again, SMBC Nikko officers and employees SMBC Nikko transferred undisclosed information obtained from company b to Sumitomo Mitsui Banking Corporation without prior consent from company b. (Case 3) Listed company d holds the majority of the shares of listed company e, and the two companies were in a so-called parent-subsidiary listing relationship. ) was being considered. Regarding this matter, the executives of company d themselves requested SMBC to ensure thorough information management regarding the tob and to disclose the information to the minimum necessary members within SMBC. however, SMBC Nikko While recognizing the need for thorough management of such information, officers and employees shall receive non-disclosed information concerning said tob from Sumitomo Mitsui Banking Corporation multiple times and disclose such information. SMBC Nikko It was shared with insiders. SMBC Nikko The above act is deemed to fall under the act prescribed in Article 153, Paragraph 1, Item 7 of the Cabinet Office Ordinance on Financial Instruments Business, etc. based on Article 44-3, Paragraph 1, Item 4 of the Financial Instruments and Exchange Act. be done. In addition, the above acts SMBC Nikko While recognizing that officers and employees must not exchange information between banks and securities companies, SMBC Nikko prioritizing the interests of SMBC Nikko In promoting the bank-securities collaboration business, it is recognized that the executive officers themselves are involved in receiving non-disclosed information and sharing information with internal parties. SMBC Nikko As such, it is recognized that this is due to the lack of awareness of legal compliance. 2. Contents of order 〇 Business suspension order (Article 52, Paragraph 1 of the Financial Instruments and Exchange Law) Suspension from October 7, 2012 to January 6, 2023. 〇 Business improvement order (Article 51 of the Financial Instruments and Exchange Act) (1) Confirmed in an inspection by the Securities and Exchange Surveillance Commission i. 1. Regarding the facts (1) to (3) (hereinafter referred to as "market manipulation cases"), the following shall be implemented in order to ensure sound and appropriate business operations. (1) Clarification of management responsibility based on this disciplinary action (2) Promptly formulating an effective business improvement plan including the following points based on an analysis of the fundamental cause of the market manipulation incident, and making steady progress・Strengthen the business management system and internal control system (including the system to prevent unfair trading) ・Foster a sound organizational culture that emphasizes compliance i. 1. In order to ensure the sound and appropriate operation of business regarding the fact (4) (hereinafter referred to as "bank securities firewall regulation violation case"), we will prevent recurrence based on the analysis of the cause of the bank securities firewall regulation violation case. Toward this end, promptly formulate an effective business improvement plan that includes the following points and steadily implement it.・Strengthen business management system and customer information management system ・Foster awareness of compliance related to customer information management to be reported at (4) Report on the implementation status of (3) above in writing within 15 days after the end of the quarter for the time being.