In late 2010, Reuters reports, a group of investors complained to Japan’s Securities and Exchange Surveillance Commission that shares in Japanese companies were under-performing in the days leading up to stock offerings. Were securities firms leaking word of offerings before the deals were announced, allowing investors to sell stock ahead of public disclosures? Maybe. To find out, the regulators would have to contend with bank stonewalling tactics:
In one case, when investigators identified a junior Nomura equity saleswoman in her 20s as the source of a leak on a $6 billion offering by energy firm Inpex (1605.T) in 2010, they were told by the brokerage she couldn’t answer further questions because the stress of the investigation had become too much.
Ah, the old, “We can’t talk to you because your probe into our illegal activities is making us very nervous” approach. Very savvy! And apparently short-term successful: Though the SESC alerted U.S. regulators to potential leaks at Nomura as early as mid-2011, it took until this month for the firm to come clean to three incidences of insider trading.
The upshot? Regulators will likely order Nomura to improve internal controls, and may push for a leadership shake-up, says Reuters. Also: We’re going to give some of those crazy shareholder proposals in Nomura’s latest proxy statement a second look.
