Attempted robbery and murder for market manipulation. The series of scandals at Nomura Securities could hamper the recovery of corporate and consumer businesses Nomura Holdings (HD).
On the evening of October 31, when Nomura Securities announced that President Kentaro Okuda and eight other executives had voluntarily returned part of the executive compensation in response to market manipulation of the issuance of government bonds (a violation of the Financial Instruments and Exchange Act Exchange), Kyodo News interviewed people involved in the investigation Based on this report, a 29-year-old man who was an employee of Nomura Securities at the time of the incident was arrested on suspicion of attempted robbery and murder and arson of a building residential.
According to this report, on July 28, the suspect asked a couple in their 80s in Hiroshima City, who were customers of his business, to have a meal at the couple’s home, and it appears that he mixed a drug with the effect of sleeping into the. a meal It is believed that, although he was unconscious, he set the house on fire and stole about 26 million yen in cash.
In a phone interview with Bloomberg, a Nomura HD spokesperson confirmed that the man was a former employee and said he had already been fired. He also said it was extremely unfortunate that a former employee had been arrested. He declined to comment on the timing or reason for the disciplinary dismissal.
It has already been revealed that at least 10 companies, including major life insurance companies, have temporarily suspended some business with Nomura Securities over the market manipulation issue. In the home retail business, the company had been implementing reforms for years, including strengthening asset management for wealthy customers, and just as the company was starting to see results, an incident involving a former sales employee occurred .
Trends in the pre-tax profits of Nomura HD’s three main divisions
Source: Company details
Finance Minister Katsunobu Kato said at a press conference on November 1, “It is very unfortunate that securities companies, which are required to contribute to ensuring fairness and transparency as market gateways, engage in market manipulation in this way.” he will closely monitor the status of the implementation of efforts to strengthen our legal compliance system and take appropriate measures.”
Nomura HD’s stock price on the same day temporarily fell to 777.5 yen, down 2.7% from the previous day.
Hideyasu Ban of Bloomberg Intelligence points out that the decline of Nomura Securities’ credibility and brand image is inevitable. “If an employee causes such an incident, it creates anxiety among customers,” he said, indicating that the company must focus on how quickly the anxiety can subside.
Morningstar analyst Michael McDad said that while the incident was the actions of individual employees and the company should not be held responsible, it was a “pretty serious incident” that damaged Nomura’s social reputation.
Some suggest that the business model of face-to-face securities sales to individuals is the cornerstone of events.
Haruhiro Nakano, president of Nakano Asset Management, says that while commissions and compensation remain incentive-based, the mainstream method is still to build close relationships with elderly families and sell them financial products while listening to them talk in their homes. He expressed the opinion that the continuation of a business model that could be described as “Showa Style,” is the fertile ground for these incidents.
In 2019, a former employee of the Himeji branch of Nomura Securities was arrested on suspicion of fraud by recommending fake investment products to multiple investors, including Nomura Securities customers. In the same year, two employees were arrested on suspicion of forcing a woman into a coma by giving her a large amount of alcohol, and then sexually assaulting her.
Nomura HD will announce its consolidated financial results for the July-September period this afternoon. Analysts expect profits to rise year on year even though the domestic stock market was recovering from the crash in August. Attention is also being drawn to his comments at a press conference about the impact of the series of scandals.
(The article will be updated with comments from Finance Minister Kato etc.)
Interview between Time.news Editor and Financial Expert
Editor: Welcome, and thank you for joining us today. We’re discussing a pressing issue surrounding Nomura Holdings, particularly the recent scandal involving market manipulation and a serious criminal incident involving a former employee. Can you provide us with an overview of the situation?
Expert: Absolutely, and thank you for having me. As you’ve mentioned, Nomura Securities has faced significant turmoil recently. On October 31, the company reported that President Kentaro Okuda and several executives voluntarily returned part of their compensation in response to allegations of market manipulation related to government bonds. This event has raised considerable concerns about the integrity of their business practices, particularly as it violates the Financial Instruments and Exchange Act.
Editor: Indeed, it’s quite alarming. The situation escalated further with the arrest of a former employee, accused of attempting robbery and murder, along with arson. How does this incident affect Nomura’s reputation?
Expert: It’s devastating, to say the least. The actions of this individual have not only tarnished the firm’s image but have also created significant anxiety among clients and stakeholders. As noted by Hideyasu Ban from Bloomberg Intelligence, the decline in credibility and brand image seems inevitable. Customers will naturally question the safety and integrity of their dealings with Nomura, which could impact their business relationships and market position.
Editor: Absolutely. The impact on business relationships seems quite immediate. Reports indicate that at least ten companies, including major life insurance firms, have suspended some business dealings with Nomura. What does this suggest about the potential long-term effects on the company’s operations?
Expert: It suggests a considerable strain on their operational capacity. When key partners begin to distance themselves due to reputational concerns, it can lead to dire consequences for revenues and profitability. Nomura has been making strides in its home retail business, especially in enhancing asset management for affluent clients. However, these recent events could threaten the progress they’ve made. It’ll be vital for them to act quickly to restore trust and reestablish connections with these companies.
Editor: Speaking of trust, how do you see the regulatory response playing out? Finance Minister Katsunobu Kato has publicly expressed his dismay over these events. What measures do you think will be implemented to ensure compliance in the securities industry?
Expert: The government’s monitoring and impending regulatory measures could lead to stricter compliance requirements for securities firms. Given the stakes involved, it’s likely that there will be increased scrutiny of trading practices and internal controls within companies like Nomura. Such measures aim to restore confidence in the financial markets, but they might also impose additional burdens on firms to comply with heightened standards.
Editor: With so much at stake, how should Nomura move forward to regain both its reputation and operational stability?
Expert: The first step for Nomura should be to implement an internal review of their practices. They need to address the vulnerabilities that led to the market manipulation allegations and ensure that their compliance systems are robust enough to prevent future misconduct. Additionally, enhancing transparency regarding their measures to rectify the situation and reassure clients will be crucial. They might also consider public relations strategies to repair their image, emphasizing a commitment to ethical operations in the future.
Editor: It sounds like a challenging road ahead for Nomura. Can you provide your final thoughts on the broader implications of this scandal in the financial sector?
Expert: Certainly. This incident serves as a sobering reminder of the potential consequences of unethical behavior in finance. It undermines the foundation of trust that is essential for market operations. The scandal could lead to increased regulatory scrutiny across the entire industry, prompting firms to evaluate their internal policies and reinforce a culture of ethical responsibility. The focus will ultimately shift toward enhancing transparency and fostering an environment where compliance is prioritized.
Editor: Thank you for your insights. It’s clear that the repercussions of these events reach far beyond Nomura Holdings, and it will be interesting to see how this situation develops in the coming months. Thank you for your time and expertise today.
Expert: Thank you for having me, and I look forward to seeing the industry’s response unfold.