Tokyo Stock Exchange Requested Deutsche Securities Ltd. To Submit Business Improvement Report

TSE requested Deutsche Securities Ltd. to submit business improvement report as to strengthen its internal control system, secure strict compliance by the directors and staff, take preventive measures against recurrence of the above mentioned violations, and clarify locus of responsibility pursuant to the TSE's Trading Participant Rule.

Short-selling in breach of the Law

In November 2001 the company executed short-selling of stocks on its own account without legally required disclosure of the fact of short-selling to the stock exchange many times. The company failed to apply to borrow stocks to a securities finance company, although the company intended to. (Short-selling settled by borrowing stocks from a securities finance company was not required to disclose the fact of short-selling to the stock exchanges.)

In addition, the company conducted short sales at a price lower than the latest published price immediately prior to the short sale.

The conduct above was found to violate the Article 26-3 (1), the Article 26-4 (1) of the Cabinet Order (the Securities and Exchange Law) and the Article 162 (1) (i) of the Law, both of which regulate short-selling.