Tokyo Stock Exchange Requested Nippon Global Securities Co., LTD. To Submit Business Improvement Report

TSE requested Nippon Global Securities Co., LTD. (Nippon Global) 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 violations mentioned below, and clarify locus of responsibility, pursuant to the TSE's Trading Participant Rule.

Short-selling in breach of the Law

In November 2001, Nippon Global 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. Nippon Global staff failed to apply to borrow stocks to a securities finance company, though they executed the short-selling orders with the intention of settling by borrowing stocks from a securities finance company.

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. The conduct above was found to violate the Article 26-3 (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.