Wed, Jul 04, 2012 - Page 15 News List

Nomura dropped from DBJ bond sale on leaks case


Nomura Holdings Inc, Japan’s biggest brokerage, was dropped as a lead underwriter for state-owned Development Bank of Japan Inc’s (DBJ) bond sale this month because of its involvement in leaking insider information.

Nomura was replaced by Mitsubishi UFJ Morgan Stanley Securities Co on the deal, according to a faxed statement from Mizuho Securities Co yesterday. DBJ, which had said in May that it had hired Tokyo-based Nomura, as well as Daiwa Securities Group Inc and Mizuho Financial Group Inc, said it made the change to avoid “any disruption” to the offering.


The lost mandate may increase pressure on Nomura chief executive officer Kenichi Watanabe to take more steps to restore clients’ confidence after employees gave out information ahead of transactions in 2010. Nomura last week said it would cut top executives’ pay and suspend some operations amid a government crackdown on insider trading.

Tokyo-based Nomura spokeswoman Keiko Sugai declined to comment.

DBJ has not decided how much to raise from selling the three and five-year bonds, Tokyo-based DBJ spokesman Daisuke Inaba said by telephone.

Japanese Financial Services Minister Tadahiro Matsushita has called on 12 local brokerages to review how they handle confidential information, he said at a press conference yesterday, adding that the measure is a response to leaks by a “major” brokerage.

Regulators have yet to complete their inspection of Nomura after finding that its staff gave tips on equity offerings by Inpex Corp, Mizuho Financial and Tokyo Electric Power Co.


The brokerage concluded an internal investigation on Friday last week, and said it had found that some staff appeared to be “willing to do anything to meet sales targets,” according to a report it issued last week.

While Nomura is now “halfway toward fixing” the breaches and is making progress on addressing shortcomings in its compliance, the company was initially slow to react to the regulator’s inspection, the minister said.

Regulators have also investigated firms including the local brokerage units of Sumitomo Mitsui Financial Group Inc and JPMorgan Chase & Co. Topix Index has dropped 9.5 percent since March 21, when the Japanese Securities and Exchange Surveillance Commission began announcing that underwriters had been found to have leaked information before stock offerings.

Daiwa is also subject to the government probe, two people with knowledge of the situation said last week. An employee at Japan’s second-biggest brokerage provided confidential information on Nippon Sheet Glass Co’s 2010 public share offering to a hedge fund, the people said, asking not to be identified before a public announcement.

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