Nomura's chief steps down over insider trading scandal
By Harumi Ozawa, AFP
July 27, 2012, 11:30 am TWN
TOKYO -- The head of Japan's biggest securities firm resigned on Thursday in the wake of an embarrassing insider trading scandal, part of a widening national probe into the widespread practice.
Nomura Holdings' Chief Executive Kenichi Watanabe will step down as of July 31, while Takumi Shibata, Nomura's chief operating officer, will also leave his post, the company said in a statement.
Watanabe vowed last month he would not resign after Nomura released the findings of a damning report that revealed some employees had leaked material information to clients, while it warned that Nomura had “systemic defects.”
But on Thursday, he stepped aside to be replaced by Koji Nagai, president of Nomura Securities.
“I wanted to see that measures for improvement to address the matters pointed out (by authorities) and other additional measures are put in place,” Watanabe told a press briefing in Tokyo.
The firm's new chief, however, acknowledged that a management shuffle would not immediately fix Nomura's tarnished reputation.
“(The scandal) has caused very big damage,” he told reporters.
“We are aware of how important it is to regain public trust. And we must realize that we need to rebuild the company from the bottom, not just by making management changes.”
The news comes as Japanese authorities are carrying out a wide-ranging probe into insider trading which, although illegal in Japan, is widespread and carries only token fines.
Separately on Thursday, Nomura said net profit in its fiscal first quarter to June shrank 89.4 percent to 1.89 billion yen (US$24.19 million) owing to lower retail and wholesale trading business.
Revenue was 12 percent higher year-on-year at 369.3 billion yen, it said.
The company began an aggressive expansion drive when it bought some of Lehman Brothers' businesses in 2008.
Since the scandal, Nomura has reportedly been dumped from several bond and share sales including the government's sale of its stake in Japan Tobacco and once-bankrupt Japan Airlines' expected share offering later this year.
The company report said Nomura was overrun with “serious systemic defects that would erode confidence in (Nomura) as a securities company.”
The report said the firm's sales staff tipped off clients about share sales and information often flowed freely between sales and Nomura's investment banking and research side, which is usually barred.
On Thursday, Nomura said a continuing internal probe may have found more cases of material information being passed to clients by Nomura employees.
Nomura shares rose 5.71 percent to 259 yen in Tokyo with its financial results released after markets closed.