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Based upon Article 19 of Trading Participant Regulations, the TSE requested Marusan Securities Co., Ltd. ("Marusan Securities") to submit a business improvement report requiring the company (i) to explain properly to the customers affected by the violation and to respond to them completely ;(ii) to investigate the essential cause of the violation, to clarify the locus of the problem, and to strengthen the internal management system in regard to the following objectives: (a) discussion of how the internal management system should be and clarification of the locus of responsibility, (b) improvement of the legal compliance awareness among board members, executives, employees, etc. by conducting necessary compliance training and enlightening properly, in order to keep business activities fair and proper, (c) creation and implementation of a plan based upon the above to prevent a recurrence.
Details of the Violation
When Marusan Securities developed a new system for introducing specified accounts based on tax laws in 2003, they created a mechanism which assumed that all eligible customers had applied for a share allotment to shareholders regardless of whether they actually had or not, and calculated an average purchase price accordingly.
Under the system, Marusan Securities had to adjust the average purchase price for customers who had not applied for the share allotment. However, from October 2005 to April 2008, Marusan Securities failed to adjust the average purchase price for customers who were shareholders of 4 issues for which share allotments were made during the period, despite their not having applied for the share allotments. As a result, Marusan Securities informed 152 customers, who had already sold the 4 issues, of wrong average purchase prices.
The above is acknowledged to be a 'situation in which information regarding the customers' trading of securities or other transactions, settlement situation, or other necessary matters is deemed to not have been reported properly' as defined in Article 123, Item 8 of the Cabinet Office Ordinance on the Financial Instruments Business, under Article 40, Item 2 of the Financial Instruments and Exchange Act.
