A managing director and a senior managing director, in the course of business, created circumstances where sales staff did not make an explanation of a free ride system for switching, which was an important matter, when they solicited to make a switching of beneficiary certificates of investment trusts which were redeemed before maturity. They ran business without operating an effective internal control system, such as making and maintaining an internal report regarding the explanation or monitoring of their activities.
The above act is acknowledged to be 'the state that a securities company, on its soliciting to make a switching of beneficiary certificates of investment trusts, etc., does not make an explanation of important matters on such switching to a customer' outlined in Item 8 of Article 10 under the Ordinance of Cabinet Office Concerning Regulation, etc. of Conducts of Securities Company based on Item 2 of Article 43 under the Securities and Exchange Law.
