Nomura Holdings Inc. plans to reorganize its wholesale equities business as part of a remediation action plan in light of a regulatory investigation into reported leaks from unit Nomura Securities Co. Ltd.'s information control system.
A researcher at Nomura Research Institute who was a member of an advisory panel looking at adjusting the listing criteria for each of the Tokyo Stock Exchange's sections passed on confidential information relating to the listing and delisting criteria for the TSE upper section to a strategist at Nomura Securities. The strategist then passed on the information to other employees at the securities unit, some of whom provided the information to institutional investor clients, according to an internal investigation.
Japan's Financial Services Agency decided to issue a business improvement order to Nomura Securities in relation to the alleged leaks, The Nikkei reported May 23, without citing sources.
The FSA will reportedly ask Nomura Securities to strengthen its internal controls and compliance systems, and could come as soon as May, the report said.
In a May 24 release, Nomura Holdings said it would reorganize the wholesale equities business to ensure that staff are incentivized to contribute to the development of the capital markets. In addition, group CEO Koji Nagai and Nomura Securities CEO Toshio Morita will take a 30% and 20% monthly salary cut, respectively, for three months as part of the remediation plan. Other executives of Nomura and Nomura Securities will also take 10% to 20% monthly pay cuts for two to three months.
The company will establish a new framework to tightly control corporate confidential information and other nonpublic information that could affect investment decisions.
Nomura added that it will aim to embed a conduct risk mindset and create an environment to maintain and improve self-discipline.