Nomura Holdings Inc’s CEO is to take a pay cut to assume responsibility for improper handling of stock market information by employees, the latest setback for the struggling Japanese securities firm.
Koji Nagai is to forgo 30 percent of his salary for three months, the firm said after finding that a researcher at an affiliate inappropriately shared information on potential changes to the Tokyo Stock Exchange.
The Japanese Financial Services Agency plans to order the brokerage to improve internal controls, a person with knowledge of the matter said earlier, in what would be the first such action against Nomura since 2012.
The incident could hinder Nagai’s plan to turn around Japan’s biggest brokerage after posting the first annual loss in a decade.
One corporate client has already said that it would drop Nomura as underwriter of a planned bond sale.
Nomura Research Institute’s Sadakazu Osaki, who was on a Tokyo Stock Exchange panel considering changes to market segments, leaked information within Nomura’s securities unit that was later shared with investors, said the Nikkei, which first reported the regulator’s planned action.
A business improvement order generally requires the recipient to fix internal controls rather than pay fines.
In 2012, the agency issued the penalty against Nomura after finding that employees leaked information on equity offerings that was subsequently used for insider trading. Nagai’s predecessor resigned in the wake of that scandal.
While the agency does not see the latest incident as amounting to insider trading, it determined that it undermined trust in the market, the Nikkei said.
Osaka Gas Co plans to drop Nomura as an underwriter for a bond sale due to the report on the agency’s move, a spokeswoman said.
The utility is planning sales of long-term bonds later this month, data compiled by Bloomberg showed.
Nagai’s pay cut came just one month after he and other executives had their bonuses scrapped following the company’s ¥100.4 billion (US$916.7 million) loss in the fiscal year ended March.
The CEO has embarked on a US$1 billion cost-reduction program centering on revamping its global markets and investment banking operations. He is also reducing retail branches at home.
Investors have shrugged off the news of impending regulatory action.
Shares of Nomura closed 2 percent higher in Tokyo before the company issued its report. Nomura Research Institute gained 1.1 percent.
Nomura owns about 39 percent of institute, the research institute said.
The company has not allowed Osaki to speak publicly since the incident, institute spokesman Yasuhiro Komatsu said.
While the information he provided to Nomura Securities was all publicly available, his act was inappropriate, Komatsu said.
Japan Exchange Group Inc is considering changes that involve cutting the number of stock sections from four to three, amid criticism that there are too many.
The bourse operator in March released a report that detailed feedback from investors, companies and brokerages on ways to revamp the sections.
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