Japan Regulator Instructs Nomura Securities to Investigate ex-Employee Age 29 Arrested in Japan for Suspected Robbery, Attempted Murder & Arson of an Inhabited Building in Hiroshima, Reports of a Man Drugged an Elderly Customer & Spouse and Stealing $170,000
9th November 2024 | Hong Kong
Japan financial regulator has instructed Nomura Securities to investigate an ex-employee (Age 29) who had been arrested in Japan for suspected robbery, attempted murder & arson of an inhabited building in Hiroshima, with reports of a man drugged an elderly customer & spouse and stealing $170,000. Nomura (5/11/24): “On October 30, 2024, a former employee of Nomura Securities was arrested by Hiroshima Prefecture police on suspicion of robbery, attempted murder, and arson of an inhabited building. We would like to express our heartfelt sympathy and apologize to our clients who suffered because of this incident. We also apologize to all those affected by the trouble it is causing. We will continue to cooperate fully with the police investigation. We take this matter very seriously. An incident like this must never happen at a financial institution entrusted with looking after its clients’ assets. To reassure our clients and regain their trust, we have introduced new pre-approval rules governing visits by Wealth Management employees to clients’ homes for the foreseeable future. We are also tightening rules around the monitoring of employee movements to ensure more robust and effective oversight. In addition, we will introduce block leave where employees must be absent from the workplace for a certain period of time to detect any wrongdoing, implement stricter evaluation of employee compliance and conduct, and carry out training to foster professional ethics. To respond better to the situation on the ground, we sent a Senior Managing Director in charge of Wealth Management Retail Strategy to work out of our Hiroshima Branch Office from yesterday. We remain committed to reinforcing our client-centric approach to create an environment where clients can have peace of mind when working with us.” Earlier in 2024 November – Nomura Japan Government Bond Futures Manipulation: Nomura has paid $142,000 fine, and trader who manipulated the market had left Nomura. CEO Kentaro Okuda volunteered to return 20% of 2 months salary, with senior executives to return 10% or 20% of 2 months salary. More info below:
“ Japan Regulator Instructs Nomura Securities to Investigate ex-Employee Age 29 Arrested in Japan for Suspected Robbery, Attempted Murder & Arson of an Inhabited Building in Hiroshima, Reports of a Man Drugged an Elderly Customer & Spouse and Stealing $170,000 “
Nomura – Nomura is a global financial services group with an integrated network spanning approximately 30 countries and regions. By connecting markets East & West, Nomura services the needs of individuals, institutions, corporates and governments through its three business divisions: Wealth Management, Investment Management, and Wholesale (Global Markets and Investment Banking). Founded in 1925, the firm is built on a tradition of disciplined entrepreneurship, serving clients with creative solutions and considered thought leadership.
Nomura Japan Government Bond Futures Manipulation: Nomura Paid $142,000 Fine, Trader Who Manipulated Market Had Left Nomura, CEO Kentaro Okuda Volunteered to Return 20% of 2 Months Salary, Senior Executives to Return 10% or 20% of 2 Months Salary
2nd November 2024 – Nomura Japan Government Bond Futures Manipulation: Nomura has paid $142,000 fine, and trader who manipulated the market had left Nomura. CEO Kentaro Okuda volunteered to return 20% of 2 months salary, with senior executives to return 10% or 20% of 2 months salary. In 2024 October, Japan Nomura Holdings clients are suspending trading with Nomura for manipulation of 10-Year Japan Government Bond (JCB) Futures by a trader in 2021 March, with Japan Finance Ministry planning to suspend Nomura from the list of primary group of Japan government bond dealers. In 2024 September, Japan Nomura Holdings is facing $150,000 fine for manipulation of 10-Year Japan Government Bond (JCB) Futures by a trader in 2021 March, with the Nomura trader placing large orders with no intention to buy or sell. Nomura is Japan largest brokerage & investment bank. Nomura (31/10/24): “Following a recommendation* issued on September 25, 2024, by Japan’s Securities and Exchange Surveillance Commission, yesterday Japan’s Financial Services Agency issued an administrative monetary penalty payment order of 21.76 million yen against Nomura Securities Co., Ltd. for Japanese government bond futures transactions conducted in March 2021. Nomura Securities paid the monetary penalty today. We apologize to our clients and all other concerned parties for the trouble this has caused. We take this matter very seriously. We will continue to further enhance our compliance framework and internal controls to prevent similar incidents occurring in the future and to regain trust.” See below for full review of incident:
Nomura (31/10/24): As notified in the “Statement on Administrative Action by Japan’s Financial Services Agency” issued today, Japan’s Financial Services Agency issued an administrative monetary penalty payment order of 21.76 million yen against Nomura Securities Co., Ltd. for unlawful trading of Japanese government bond futures in March 2021. Nomura Securities paid the monetary penalty today. We have been working to revise our JGB futures trading operations since these transactions occurred. We have outlined measures to prevent a recurrence of this incident below. By fully implementing these measures, we will further enhance our compliance framework and internal controls to prevent similar incidents and to regain trust:
1) Outline of the incident – On March 9, 2021, between 8:45:49 am and 2:16:59 pm, an employee involved in proprietary trading placed multiple sell orders on the Osaka Exchange for Japanese government bond (JGBs) futures at the best offer or inferior prices to layer the ask order book, while buying the same JGB futures at a lower price, and placing multiple buy orders at the best bid or inferior prices to layer the bid order book, while selling the same JGB futures at a higher price. By repeatedly placing such sell and buy orders, the employee placed a total of 2,466 unit sell orders while buying a total of 462 units, and placed a total of 1,619 unit buy orders while selling 462 units. The series of derivative transactions and orders misled the market into believing that futures trading was thriving, potentially causing fluctuations in futures prices on the Osaka Exchange.
2) Cause of the incident – Stringent compliance and prudent risk management are fundamental to our firm. Nomura has implemented various measures to strengthen our internal controls, including incorporating ERCC Rating (Ethics, Risk Management, Compliance and Conduct) into employee assessments. To ensure that all employees actively participate in risk management, we have implemented the Three Lines of Defense as part of our risk management framework, with Front Office (first line), Compliance-related departments (second line) and Internal Audit (third line) each having responsibilities for managing risk. Based on past incidents at other companies, we have worked to strengthen our management framework. However, we recognize that the incident was caused due to insufficiencies in the following areas.
- The trader’s awareness of market manipulation, and proper training to enhance awareness
- Trading management framework in front office
- Trading surveillance system in Compliance
- Communication between front office and Compliance
3) Measures to prevent a recurrence
- Measures to strengthen traders’ awareness – We conduct training in Front Office on an ongoing basis on unlawful trading using past incidents as examples. In light of the incident, we conducted training for all traders regularly involved in JGB futures trading. We will continue to conduct training to further deepen their understanding and instill a high level of awareness of unlawful trading, including market manipulation. We will hold new regular meetings involving Compliance to share examples of unlawful trades and have discussions among participants to embed a deeper understanding.
In addition, while conduct is currently included in HR evaluations, we will work to further enhance this by deepening the involvement of HR and Compliance.
- Strengthening trading management in Front Office – For departments that mainly deal in JGB futures, in addition to the current monitoring of market risk by managers, we began monitoring of JGB futures orders and cancellations to strengthen our front office trading management framework. We started conducting regular checks on the system for suspicious transactions such as layering, as well as having each trader’s orders and cancellations checked by a superior after the close of trading hours. To ensure front office trading management operations are carried out properly, within the Front Office Supervision (FOS) framework, we follow up to make sure post-trade checks are conducted and review the monitoring status.
4) Prevention measures in Compliance – While at the time of the incident Nomura Securities’ trading surveillance system could detect cancellation of trades exceeding a certain volume, the system was not designed to detect a series of layered transactions like the one in this incident. We have already upgraded the system to detect layered orders and cancellations, and have not detected any such transactions since the upgrade. We will continue to conduct regular reviews of our surveillance and oversight functions, including our trading surveillance system, incorporating both internal and external perspectives to make improvements. Front Office and Compliance will enhance regular communications on transaction monitoring, sharing their perspectives and any challenges and issues in order to develop more sophisticated surveillance and oversight functions.
5) Verification by Internal Audit – Internal Audit will verify the progress of prevention measures, confirming the status of operations in the first and second lines of defense and their effectiveness. In addition, to improve Nomura Group’s control environment, we will work to further enhance the internal audit program.
6) Establishment of new organization – In light of the above prevention measures, we have established the Global Markets Surveillance Planning Department to ensure the swift implementation of measures in Front Office and Compliance and lead the enhancement of monitoring. With regard to Front Office and Compliance initiatives to prevent recurrence mentioned above, the new department will take the lead in confirming the implementation status of each initiative and conducting objective verifications of their effectiveness. In addition, to enhance monitoring, the department will analyze trends in the regulatory environment in major markets and tap into external expertise to draw up and revise our responses to the specific challenges identified. The department will also develop talent that can carry out these responsibilities on an ongoing basis and the organization’s operations.
6) Management initiatives to reinforce compliance with laws – In April 2024, Nomura announced our Group Purpose: “We aspire to create a better world by harnessing the power of financial markets”. As part of initiatives to put our Purpose into action, we will address the theme of our group’s responsibility in cultivating robust financial markets. We are dedicated to instilling this understanding among all executives and employees. In addition, we will include this incident in our regular compliance and conduct training for all executives and employees. We will share the issues involved in the incident, focusing on enhancing awareness of our fundamental role in ensuring market fairness as a securities company and confirming what we need to pay particular attention to in our business to ensure market soundness. Through the training, we will strive to deeply embed the values and code of conduct required of a securities company into our employees, raising awareness around questioning norms and reexamining existing values.
7) Strict disciplinary action has been taken against the trader and relevant managers in accordance with internal rules and regulations.
Japan Nomura Clients Suspend Trading with Nomura for Manipulation of 10-Year Japan Government Bond (JCB) Futures, Japan Finance Ministry Plans to Suspend Nomura from Primary Group of Government Bond Dealers, Nomura Faces $150,000 Fine for Manipulation of 10-Year Japan Government Bond (JCB) Futures by Trader in 2021 March, Nomura Trader Placed Large Orders with No Intention to Buy or Sell, Nomura is Japan Largest Brokerage & Investment Bank
19th October 2024 – Japan Nomura Holdings clients are suspending trading with Nomura for manipulation of 10-Year Japan Government Bond (JCB) Futures by a trader in 2021 March, with Japan Finance Ministry planning to suspend Nomura from the list of primary group of Japan government bond dealers. In 2024 September, Japan Nomura Holdings is facing $150,000 fine for manipulation of 10-Year Japan Government Bond (JCB) Futures by a trader in 2021 March, with the Nomura trader placing large orders with no intention to buy or sell. Nomura is Japan largest brokerage & investment bank. Japan Securities and Exchange Surveillance Commission (25/9/24): “The Securities and Exchange Surveillance Commission, today, made a recommendation to the Prime Minister and the Commissioner of the Financial Services Agency that an administrative monetary penalty payment order be issued in regard to market manipulation by Nomura Securities Co., Ltd. (Corporate Number: 6010001074037, “Nomura”) pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency. This recommendation is based on the findings of an investigation into market manipulation, whereby the following violation of laws and ordinances was identified … … Nomura is a broker-dealer that has been registered with the Commissioner of the Kanto Local Finance Bureau as a Type I Financial Instruments Business operator. Nomura, through its trader during the course of his duties, engaged in manipulative trading typically known as “layering” in 10-year Japanese Government Bond Futures in March 2021 (“JGB Futures”) listed on the Osaka Exchange (“OSE”) for the purpose of inducing others to buy or sell JGB Futures during the period from 8:45:49 a.m. to 2:16:59 p.m. on March 9, 2021. Specifically, Nomura bought a total of 462 units at a lower price while placing a total of 2,466 unit sell orders layered at the best offer or inferior prices, and it also sold a total of 462 units at a higher price while placing a total of 1,619 unit buy orders layered at the best bid or inferior prices. This constituted a series of derivative transactions that would potentially mislead others into believing that derivative transactions are thriving and cause fluctuations in prices of the financial instrument on the OSE. The act by Nomura was found to constitute “a series of purchase and sales of securities, etc.” and “make an offer” conducted “in violation of Article 159(2)(i)” as stipulated under Article 174-2(1) of the Financial Instruments and Exchange Act (“FIEA”). Pursuant to the FIEA, the amount of the administrative monetary penalty applicable to the above violation is a total of 21,760,000 yen.” Nomura (25/9/24): “Japan’s Securities and Exchange Surveillance Commission today issued a recommendation that the Prime Minister and the Commissioner of the Financial Services Agency impose an administrative monetary penalty against Nomura Securities for unlawful trading of Japanese government bond futures in March 2021. We take this matter very seriously and apologize to our clients and all other concerned parties for the trouble this has caused. We have been working to revise our JGB futures trading operations since these transactions occurred. We will continue to further enhance our compliance framework and internal controls to prevent similar incidents occurring in the future and to regain.”
Japan Nomura Faces $150,000 Fine for Manipulation of 10-Year Japan Government Bond (JCB) Futures by Trader in 2021 March, Nomura Trader Placed Large Orders with No Intention to Buy or Sell, Nomura is Japan Largest Brokerage & Investment Bank
26th September 2024 – Japan Nomura Holdings is facing $150,000 fine for manipulation of 10-Year Japan Government Bond (JCB) Futures by a trader in 2021 March, with the Nomura trader placing large orders with no intention to buy or sell. Nomura is Japan largest brokerage & investment bank. Japan Securities and Exchange Surveillance Commission (25/9/24): “The Securities and Exchange Surveillance Commission, today, made a recommendation to the Prime Minister and the Commissioner of the Financial Services Agency that an administrative monetary penalty payment order be issued in regard to market manipulation by Nomura Securities Co., Ltd. (Corporate Number: 6010001074037, “Nomura”) pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency. This recommendation is based on the findings of an investigation into market manipulation, whereby the following violation of laws and ordinances was identified … … Nomura is a broker-dealer that has been registered with the Commissioner of the Kanto Local Finance Bureau as a Type I Financial Instruments Business operator. Nomura, through its trader during the course of his duties, engaged in manipulative trading typically known as “layering” in 10-year Japanese Government Bond Futures in March 2021 (“JGB Futures”) listed on the Osaka Exchange (“OSE”) for the purpose of inducing others to buy or sell JGB Futures during the period from 8:45:49 a.m. to 2:16:59 p.m. on March 9, 2021. Specifically, Nomura bought a total of 462 units at a lower price while placing a total of 2,466 unit sell orders layered at the best offer or inferior prices, and it also sold a total of 462 units at a higher price while placing a total of 1,619 unit buy orders layered at the best bid or inferior prices. This constituted a series of derivative transactions that would potentially mislead others into believing that derivative transactions are thriving and cause fluctuations in prices of the financial instrument on the OSE. The act by Nomura was found to constitute “a series of purchase and sales of securities, etc.” and “make an offer” conducted “in violation of Article 159(2)(i)” as stipulated under Article 174-2(1) of the Financial Instruments and Exchange Act (“FIEA”). Pursuant to the FIEA, the amount of the administrative monetary penalty applicable to the above violation is a total of 21,760,000 yen.” Nomura (25/9/24): “Japan’s Securities and Exchange Surveillance Commission today issued a recommendation that the Prime Minister and the Commissioner of the Financial Services Agency impose an administrative monetary penalty against Nomura Securities for unlawful trading of Japanese government bond futures in March 2021. We take this matter very seriously and apologize to our clients and all other concerned parties for the trouble this has caused. We have been working to revise our JGB futures trading operations since these transactions occurred. We will continue to further enhance our compliance framework and internal controls to prevent similar incidents occurring in the future and to regain.”
Nomura is a global financial services group with an integrated network spanning approximately 30 countries and regions. By connecting markets East & West, Nomura services the needs of individuals, institutions, corporates and governments through its three business divisions: Wealth Management, Investment Management, and Wholesale (Global Markets and Investment Banking). Founded in 1925, the firm is built on a tradition of disciplined entrepreneurship, serving clients with creative solutions and considered thought leadership.
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