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SMBC Nikko Securities

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SMBC Nikko Securities Inc.
Native name
SMBC日興証券株式会社
Company typeSubsidiary
IndustryFinancial services
FoundedJune 15, 2009; 15 years ago (2009-06-15)
FounderGenichi Toyama
Headquarters
3-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo 100-8325, Japan
,
Japan
Key people
Yasuyuki Kawasaki (chairman)
Yuichiro Kondo (president & CEO)
ServicesSecurities brokerage
Investment banking
Number of employees
9,355 (31 December 2021)
ParentSumitomo Mitsui Financial Group
Websitewww.smbcnikko.co.jp

SMBC Nikko Securities Inc. (SMBC日興証券株式会社) is a securities firm in Japan which engages in the operation of large-scale comprehensive securities broking and trading services. The company was founded in 2009 and is headquartered in Tokyo, Japan.[1] It is a wholly owned subsidiary of the Sumitomo Mitsui Financial Group. It is the third largest securities brokerage firm in Japan.[2]

History

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The origins of SMBC Nikko Securities can be traced back to a company named Kawashimaya Shoten (川島屋商店) which was formed in July 1918 by Genichi Toyama.[3] It was formed to buy and sell stocks and bonds.[3]

In 1920, the firm was incorporated into a stock company.[3]

During the same year, Nikko Securities was created out of the securities department of the Industrial Bank of Japan.[3]

In 1939, Kawashimaya Shoten spun off its securities division forming Kawashimaya Securities.[3] In 1943, Kawashimaya Securities absorbed Kawashimaya Shoten.[3]

In 1944, Kawashimaya Securities and Nikko Securities merged with the resulting company continuing to use the Nikko Securities trade name.[3]

In 2001, the firm changed its name from Nikko Securities to Nikko Cordial Securities.[4]

In 2007, the firm became a subsidiary of Citigroup after Citigroup purchased Nikko Cordial Corporation forming Nikko Citi Holdings Inc.[5][6]

On 15 June 2009, Nikko Cordial Securities De-merger Preparatory Company Ltd was formed.[1] This is considered the legal entity of the firm up to the present.In October 2009, Nikko Cordial Securities De-merger Preparatory Company Ltd took over all of the operations of the original Nikko Cordial Securities business and certain businesses of Nikko Citigroup. It was then renamed Nikko Cordial Securities.[4] Then Citigroup sold the firm to the Sumitomo Mitsui Banking Corporation.[7]

In 2011, the firm changed its name from Nikko Cordial Securities to SMBC Nikko Securities.[4]

In 2016, the firm became a wholly owned direct subsidiary of Sumitomo Mitsui Financial Group.[4]

In 2018, the firm merged with SMBC Friend Securities while continuing to use the SMBC Nikko Securities trade name.[4]

Controversies

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2012 insider trading fine

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In April 2012, the Financial Services Agency fined the firm for leaking information about a stock offering which was considered insider trading.[2][8] Directors of the firm passed on word of the offering to at least 21 sales branches without carrying out the proper internal procedures to control the information flow.[8] At eight of those branches a total of 23 sales staff tipped off 34 clients to purchase the shares once the deal was launched. The deal was said to be a roughly 1 trillion yen ($12.4 billion) offering by Sumitomo Mitsui Financial Group, Nikko's parent, in early 2010.[8]

Investigation into market manipulation

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In November 2021, the Securities and Exchange Surveillance Commission (SESC) launched an investigation into the firm over suspicious stock transactions.[9] The firm was suspected of using its proprietary trading desk to illegitimately maintain the price of stocks in block trades.[9][10] The firm launched a complaint with financial regulators after a senior trader died following intensive questioning.[10]

On 4 March 2022, four employees of the firm were arrested on allegations of market manipulation.[2][11] The employees were Trevor Hill (Head of equity), Alexandre Avakiants (Deputy head of equity), Makoto Yamada (General manager of equity trading) and Shinichiro Okazaki (General manager of structured products).[2][11] The firm's President & CEO, Yuichiro Kondo issued a public apology afterwards.[2][11]

On 24 March 2022, prosecutors arrested a vice president of the firm and brought criminal charges against the company and five bankers. On 13 April, prosecutors charged the vice president and filed new criminal charges against the firm.[12]

On 14 February 2023, a court ordered SMBC Nikko Securities to pay a fine of 700 million yen ($5.3 million) and an additional penalty of around 4.47 billion yen for manipulating stock prices.[13]

References

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  1. ^ a b "Corporate Overview | SMBC Nikko Securities Inc". www.smbcnikko.co.jp. Archived from the original on 29 May 2022. Retrieved 18 March 2022.
  2. ^ a b c d e "UPDATE 2-SMFG's brokerage launches probe after executives arrested". Reuters. 5 March 2022. Archived from the original on 18 March 2022. Retrieved 18 March 2022.
  3. ^ a b c d e f g "History of The Nikko Securities Company Limited – FundingUniverse". www.fundinguniverse.com. Archived from the original on 28 September 2022. Retrieved 18 March 2022.
  4. ^ a b c d e "History | SMBC Nikko Securities Inc". www.smbcnikko.co.jp. Archived from the original on 18 March 2022. Retrieved 18 March 2022.
  5. ^ "Citigroup wins control of Japan's Nikko Cordial". Reuters. 27 April 2007. Archived from the original on 18 March 2022. Retrieved 18 March 2022.
  6. ^ "Citigroup to buy rest of Nikko in $4.6 bln deal". Reuters. 2 October 2007. Archived from the original on 18 March 2022. Retrieved 18 March 2022.
  7. ^ "Citi closes sale of Nikko Cordial to SMFG". Reuters. 1 October 2009. Archived from the original on 18 March 2022. Retrieved 18 March 2022.
  8. ^ a b c "UPDATE 1-Japan regulator reprimands SMBC Nikko in insider crackdown". Reuters. 20 April 2012. Archived from the original on 18 March 2022. Retrieved 18 March 2022.
  9. ^ a b "SMBC Nikko and staff probed over suspicious stock transactions". The Japan Times. 3 November 2021. Archived from the original on 27 November 2021. Retrieved 18 March 2022.
  10. ^ a b Lewis, Leo; Slodkowski, Antoni; Sugiura, Eri (9 March 2022). "SMBC Nikko complained to regulators over trader's death after questioning". Financial Times. Archived from the original on 18 March 2022. Retrieved 18 March 2022.
  11. ^ a b c Auto, Hermes (16 March 2022). "Scandal rocks Japanese finance as SMBC Nikko employees are arrested | The Straits Times". www.straitstimes.com. Archived from the original on 18 March 2022. Retrieved 18 March 2022.
  12. ^ Lewis, Leo (11 May 2022). "'Apocalyptically bad': how SMBC Nikko fell from grace". www.ft.com. Archived from the original on 7 April 2024. Retrieved 6 May 2024.
  13. ^ UEMATSU, TAKASHI (14 February 2023). "SMBC Nikko hit by 5-billion-yen penalty for stock manipulation | The Asahi Shimbun: Breaking News, Japan News and Analysis". The Asahi Shimbun. Archived from the original on 19 March 2023. Retrieved 6 May 2024.
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