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SMBC Nikko Faces Prosecution Over Tokyo Stock Market Manipulation
- By The Financial District
- Mar 9, 2022
- 2 min read
Tokyo prosecutors intend to file market manipulation charges against SMBC Nikko Securities Inc., known in the industry as one of the “market gatekeepers,” along with its four high-ranking officials under arrest, sources told the Asahi Shimbun.
Photo Insert: SMBC Nikko Gakuemmae branch
Investigators with the Tokyo District Public Prosecutors Office appear to believe that the securities house should also be criminally held responsible, citing its management oversight, the sources said.
Under a joint punishment provision of the Financial Instruments and Exchange Law, charges can be brought against a corporation as well as its employees accused of illegal conduct. In the case of market manipulation, the maximum penalty against a company is a fine of 700 million yen ($6 million).
Investigators suspect that SMBC Nikko manipulated stock prices systematically across its departments, which would constitute negligence in preventing illegal conduct, the sources said.
Prosecutors are considering applying the joint punishment provision mainly because the company earned substantial gains as a financial broker and due to the fact that it is held in such high regard in the securities industry, which they said jeopardized the reputation of the stock market itself.
“Our trading management system might have not been at a level that ensured fairness in dealings,” Yuichiro Kondo, president of SMBC Nikko, said at a March 5 news conference. The four officials, two of whom held executive positions and worked in the firm’s equity department, were arrested on March 4.
They have all denied wrongdoing. Prosecutors contend that they conspired to prop up the share price of five stocks, including those listed on the Tokyo Stock Exchange’s First Section, between December 2019 and November 2020. Block trades of those stocks allegedly resulted in the company propping up the share price to ensure the trades went through.
