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Tokyo Stock Exchange Imposed A Penalty On J.P.Morgan Securities Asia Pte. Limited

Date 04/04/2003

TSE imposed a penalty on on J.P.Morgan Securities Asia Pte. Limited ( '' J.P.Morgan '') of JPY 14 million fine for act of making a series of transactions for the sale of a security to create an artificial market.

On January 16, 2001, J.P.Morgan placed, on its own account, a large amount of the sell order of a stock at the limited price for the purpose of making the closing price of the stock lower than the "strike price". As the result, the price went down toward the close. J.P.Morgan was one of the arranger of the Exchangeable Bond ("the EB" hereafter) for the stock and had a contract with the issuer of the EB to sell a certain amount of the stock at a certain price when the closing price of the stock was below "strike price".

The acts above are found to be ''acts of conducting a series of securities transactions intended to create artificial market prices which do not reflect actual states of markets'' stipulated in the Article 4 (iii) of the Ordinance of the Cabinet Office Concerning the Regulations, etc. of Conducts of Securities Companies, and thus to have violated the Article 42 (1) (ix) of the Law as applied by the Article 14 (1) of the Law on Foreign Securities Firms.