The Tokyo Stock Exchange, Inc. (TSE) and the Osaka Exchange, Inc. (OSE) have taken disciplinary action against SBI SECURITIES Co., Ltd.
The Stock Exchanges have asked the company to submit a performance improvement report.
The TSE imposed a fine of JPY 100 million on the company in accordance with the provisions of Regulation 34, Paragraph 1, Point (8) of the TSE Trading Regulations.
The OSE has imposed a censure in accordance with the provisions of Article 42, Paragraph 1, Point (10) of the OSE Transactions Regulation.
The reason for the actions is that the company has accepted orders from clients to purchase listed financial instruments in the stock exchange market of financial instruments, while knowing that causing fluctuations in the purchase prices of said listed financial instruments, etc., will result in the artificial formation of prices from according to the actual market conditions.
In order for the initial share prices of three newly listed issues for which the Company was the lead underwriter in initial public offerings to fluctuate, to reserve or fix or stabilize the initial share prices of said issues above the public offering prices, during the period from in December 2020 to September 2021, the executive director of the Company and the director of the sales department of institutional investors, together with another executive officer, etc. head of ex-IFA business, consulted the managing director and executive director ex-capital market in relation to their duties, set target numbers for buy orders to match the numbers of sell orders expected to come in before the meetings opening of the listing dates and at least two previous business days prior to the listing dates of each issue, instructed or requested its employees in the Hong Kong subsidiary (also members of the institutional investor sales department) and in the business department of the IFA to ask clients to purchase such shares at limit prices equivalent to the public offering prices, and accept such orders prior to the opening sessions of the listing dates.
In response, the said staff of the IFA business department asked three financial intermediary service providers, of which the Company is a trusted financial instrument trader, to handle the above instructions or requests. In consideration of the above instructions or requests, the employees of the Hong Kong subsidiary and the three financial intermediary service providers requested customers to purchase the said shares at marginal prices equivalent to the public offering prices.
As a result, the Company, directly or through its Hong Kong subsidiary, accepted and executed purchase orders (2,256,600 shares of the three issues in total) from its clients (nine institutional investors and 174 general investors) at threshold prices equivalent to the public offering Prices before the opening meetings of the date of introduction of each version, while we know that causing fluctuation etc. of the purchase prices of said issues will result in artificial price formation outside of actual market conditions.
The aforementioned acts are deemed to be in violation of Article 117, Paragraph 1, Item 20 of the Cabinet on Financial Instruments Businesses, etc. in accordance with the provisions of article 38, point 9 of Financial Instruments and Stock Exchange.