From June 2002 to March 2003, a manager in the Equities Trading Department of Tokai Tokyo Securities in the course of business placed a series of massive limit buy or sell orders, with no intention of execution, in connection with the numerous issues of listed stocks that he had previously purchased or sold for the company's own account. The manager's aim was to make the prices of the stocks move advantageously to the individual stocks' position (i.e., make the stock prices rise for long positions or make the prices fall for short positions) by inducing other market participants to place orders for the purchase or sale of the same stocks.
Incidentally, after the stock prices in fact advantageously rose or fell, the manager placed additional sell or buy orders to offset the previous long or short positions, and, upon having the additional orders executed at the advantageous prices, cancelled the above mentioned massive limit buy or sell orders.
The above is acknowledged to fall under an "act of making a series of transactions for the sale or purchase of a security to create an artificial market without any reflection of the actual state of the market" provided for in Item (3), Article 4 of the Cabinet Office Ordinance Concerning Regulation, etc. of Conducts of Securities Company based upon Item (9), Paragraph 1 of Article 42 under the Securities and Exchange Law.
Financial Services Agency suspended Tokai Tokyo Securities from all stock trading on its own account from July 7 to 18, 2003 except the execution of transactions contracted on or before July 4.
