In connection with Equity Exchangeable Bonds, of which the reference shares were a specific issue of shares of a listed company, Banc of America Securities, with the involvement of the (then) head of the trading section of the equity financial products department, placed a series of large quantities of market-on-the-close limit orders to sell the reference shares at a lower price (\174) than the EB's strike price (\175), with the intention to create a situation in which the closing price of the reference shares would not become equal to or higher than the strike price unless all the orders would have been consummated, during the last one minute of trading time for the day, i.e., from 14:59 until the end of the day's trading, on December 5, 2001 ( the valuation date ).
The above act is acknowledged to fall under the ''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 Ordinance of Cabinet Office Concerning Regulation, etc. of Conducts of Securities Company as applied by Paragraph 21 of Article 24 under the Ordinance of Cabinet Office Concerning Foreign Securities Firms based upon Item (9), Paragraph 1 of Article 42 under the Securities and Exchange Law as applied by Paragraph 1 of Article 14 under the Law on Foreign Securities Firms.
