Financial Services Agency

December 1, 2006 Financial Services Agency Daiwa Regarding administrative actions against joint-stock companies Daiwa As a result of the inspection by the Securities and Exchange Surveillance Commission of the stock company, the fact of violation of the law was recognized as follows, and an administrative action was recommended (opens in a new window) (November 22, 2006) . (1) Acts of entrusting the purchase and sale of securities of customers while knowing that there is a risk of insider trading Daiwa Himeji Branch Investment Banking Business Deputy Manager A (hereinafter referred to as "Deputy Manager A") Regarding the purchase order of 1,500 shares in total twice in the account under the name of company c opened at the Himeji branch of the securities company on October 4th and 6th, 2005 by the officer, due to the following circumstances, Article 166 of the Securities and Exchange Law Despite being aware that there was a risk of violating the provisions of Article 1, paragraph 1, the relevant purchase order was accepted without taking necessary measures such as requesting a consignment order form. (a) Due to the history of opening an account in the name of company c, etc., there was suspicion that the account was an account in the name of an officer of company b. (b) At the time of receiving the purchase order, he was aware that there was an undisclosed material fact that company b would undergo a stock split. (c) There is a suspicion that the purchase order was directed by an officer of Company b, and that the order was placed by another officer of the company. The above acts by the securities company and the deputy section manager a were found to fall under Article 4, Item 8 of the Cabinet Office Ordinance Concerning Act Regulations, etc. of Securities Companies under Article 42, Paragraph 1, Item 10 of the Securities and Exchange Act. be done. (2) Situation in which it is recognized that the management status of customer securities trading is not sufficient to prevent unfair trading related to corporate information. I was entrusted with the purchase and sale of a client's securities while knowing that there was a risk of trading. Daiwa Himeji Branch Manager d (Period of Enrollment: April 2001 to December 2004; hereinafter referred to as "Branch Manager d") and his successor Branch Manager e (same: December 2004 to December 2006) Until March 2009. Hereinafter referred to as “branch manager e”) was conducting business without taking sufficient measures to prevent insider trading as follows. (a) Branch manager d did not take sufficient measures to prevent insider trading in relation to his business, as follows. B. In spite of the fact that, in principle, the company is instructed to prohibit investment banking staff from being in charge of securities trading transactions as a general rule, deputy section manager a is trading from an account in the name of company c. I instructed and accepted that I was in charge of accepting orders. Regarding the trading of company b stocks in the account under the name of company c, I was concerned that caution would be required from the perspective of insider trading, etc., so I will be careful of insider trading, etc. for deputy manager a. However, he did not give the same instructions to the internal administrator of the branch, nor did he personally confirm the trading, etc. of company b's shares in the same account. rice field. (b) Branch manager e confirms that company c is an introduced customer of company b and continues to purchase shares of company b. Despite being in charge of entrustment and being aware of the existence of the material facts described in (1) and (b) above, sufficient measures were not taken to prevent insider trading. The situation of the above-mentioned business of the securities company, where the branch managers d and e were conducting business without taking necessary measures, was determined by the Cabinet Office concerning the conduct regulations of securities companies based on Article 43, Item 2 of the Securities and Exchange Law. It is recognized as falling under Article 10, Item 4 of the Cabinet Order. (3) Deputy Director A, who accepts orders to buy and sell securities from customers without performing identity verification under the Identity Verification Act, shall, as stated in (1)(a) above, Despite having a suspicion that it was an account with a borrowed name of an officer of Company b, only a formal identification of the account was performed, and the identification of customers, etc. and deposit accounts, etc., by financial institutions, etc. did not perform identity verification as stipulated in the Act on Prevention of Unauthorized Use of The above acts performed by the securities company and the deputy section manager a are stipulated in Article 3, Paragraph 1, Item 29 of the Act for Enforcement of the Act on the Prevention of Unauthorized Use of Deposit Accounts, etc. and Customer Identity Verification by Financial Institutions, etc. It falls under the act of not performing identity verification when conducting "the transaction when the counterparty to the transaction is suspected to be impersonating the person in the name of the transaction", and financial institutions etc. It is recognized as a violation of Article 3, Paragraph 1 of the Act on Prevention of Unauthorized Use. Based on the above, today, we have decided to provide the company with a loan in accordance with Article 56, Paragraph 1 of the Securities and Exchange Act and Article 9 of the Act on the Prevention of Unauthorized Use of Deposit Accounts, etc. and Customer Identity Verification by Financial Institutions, etc. , and took the following administrative actions: 1. Order to suspend business From December 19, 2006 to December 20, 2006, out of the Himeji Branch's business, entrusted business related to the trading of securities subject to regulation under Article 166 of the Securities and Exchange Law (except for those approved by the Company). 2. Business Improvement Order and Correction Order (a) A drastic review of the internal control system at the Himeji Branch. (b) Clarify who is responsible for the facts that caused this administrative disposition. (c) Verification of the internal control system at our branch offices, as well as formulating and implementing recurrence prevention measures. (d) Thoroughly raise awareness of legal compliance among all officers and employees through training, etc. 3. Regarding 2 above, please submit a written response by January 4, 2007 (Thursday).