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Tokyo Stock Exchange: Trading Suspension Upon Dresdner Kleinwort Wasserstein (Japan) Ltd, Tokyo Branch

Date 17/06/2002

TSE suspended Dresdner Kleinwort Wasserstein (Japan) Ltd., Tokyo Branch ("the Branch") from trading in the TSE market in relation to commissioned sales and purchases of stocks on behalf of affiliated companies between June 17, 2002 and June 28, 2002. pursuant to the Trading Participant Rule.

Short-selling in breach of Securities & Exchange Law

During the period between April 2001 and February 2002, Dresdner Kleinwort Wasserstein (Japan) Ltd., Tokyo Branch ("the Branch") placed a number of its customers' short-selling orders without legally required confirmation to the customers and disclosure to the stock exchange that the orders are short-selling.

During the period between December 2001 and February 2002, the Branch placed a number of short-selling orders on its own account without legally required disclosure to the stock exchange that the orders are short-selling. In addition, the Branch was found to have placed short-selling orders at the lower prices than the latest executed and published ones.

The acts above are found to violate the Article 26-3 (1), (2), (6) and the Article 26-4 (1) of the Cabinet Order (Securities & Exchange Law) and Article 162 (1) (i) of the Securities & Exchange Law, both of which regulate short-selling.

2. Securities business without prior authorization and non-securities businesses without prior approval of or notification to the FSA.

The Branch conducted the following securities business without legally required prior authorization and non-securities businesses without legally required prior approval of or notification to the FSA;

  1. Intermediation of trade in over-the-counter derivatives contract on a security.
  2. Intermediation of credit derivative transactions.
  3. Intermediation of cash lending/borrowing.
  4. Intermediation of sale or purchase of monetary credit.
  5. Intermediation of trade other than one relating to securities
The acts above are found to violate the Article 7 of the Law on Foreign Securities Firms (LFSF), the Article 34 (3) and (4) of Securities & Exchange Law applied based on 14 (1) of the LFSF.

The FSA issued the following orders to the Branch:

  1. Suspend business operation
    1. Suspend commissioned sales and purchases of stocks on behalf of affiliated companies for 10 business days between June 17, 2002 and June 28, 2002.
    2. Suspend the businesses listed in 2.(1), which were conducted without prior authorization, approval or notification, for 5 business days between June 17, 2002 and June 21, 2002.
  2. Improve its compliance with the law
    1. Strengthen the internal control system, secure strict compliance by the directors and staff, make preventive measures against recurrence of the above mentioned violations, and clarify locus of responsibility.
    2. Work out concrete measures to root out short-selling in breach of the Law including a target date, and to impose stricter internal penalty to a staff and his/her supervisor in the Branch.
    3. Quarterly submit a written report to the FSA on the implementation of the (1) and (2) measures above.