TSE also requested Chuo Securities to submit a business improvement report regarding enforcement of its internal control system and clarification of locus of responsibility, measures to prevent the recurrence of the violation below, and security of strict compliance by the directors and staff.
(1) Conclusion of a contract to manage discretionary accounts
The Vice Director of the Sales Department of the head office, in the course of business, concluded contracts with clients to manage discretionary accounts, which enabled him to decide issues, volume, price, and whether to purchase or sell without obtaining the individual consent of the clients on January 24 and March 5, 2003 . He accepted orders and executed them based on contracts from January 24 to August 22, 2003 . Another employee was also involved in the same type of act.
The above act is acknowledged to be an 'act of entering into a contract to manage a discretionary account' outlined in Item 5, Paragraph 1 of Article 42 under the Securities and Exchange Law.
(2) Displayed to cause misapprehension concerning important facts in relation to securities trading
From August 31, 2001 to March 12, 2003 , the Director of the Sales Planning Department of the head office, and two branch managers, in the course of business, displayed to cause misapprehension through advertisements which stressed dividends and sweeteners for stockholders and suggested a fixed amount of dividend every year. They solicited many customers to purchase stocks by sending leaflets and placing advertisements over the counter.
The above act is acknowledged as an 'act of displaying to cause misapprehension concerning important facts in relation to securities trading' outlined in Item 1, Article 4 of the Ordinance of Cabinet Office Concerning Regulation, of Conducts of Securities Company based on Item 9, Paragraph 1 of Article 42 under the Securities and Exchange Law.
