More On Legal & Compliancefrom The Advisor's Professional Library
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
- Disaster Recovery Plans and Succession Planning RIAs owe a fiduciary duty to clients to prepare for disasters and other contingencies. If an RIA does not have a disaster recovery plan, clients financial well-being may be jeopardized. RIAs should also engage in succession planning, ensuring a smooth transaction if an owner or principal leaves.
Kenichi Watanabe stepped down as head of Japan’s top investment bank over an insider trading scandal as the bank's internal investigation found a "high possibility" that more cases would emerge.
Reuters reported Thursday that Koji Nagai was named the new CEO of Nomura as Watanabe and the chief operating officer, Takumi Shibata, both were ousted over insider information leaks to clients of its securities unit in 2010. Nagai had taken over that unit in April; Atsushi Yoshikawa, the head of U.S. operations, succeeds Shibata as COO. Both men’s appointments are effective Aug. 1.
Watanabe and Shibata had been the moving forces behind Nomura's takeover of Lehman Brothers’ Asian and European assets, and their departure calls that strategy into question.
This was the third insider trading scandal since Watanabe became CEO four years ago. While Nomura had cut his pay and that of Shibata a month ago, that response did not satisfy the bank and the leadership revamp resulted.
Jim Sinegal, an analyst with Morningstar, said in the report, "When you look at their history, the number of scandals, this was the last straw."
Nagai, who has been with the bank for 30 years, said he intended to provide Nomura with a "new global strategy." He added that he would not abandon the bank’s goal of being a global investment bank centered in Asia. He was quoted saying, "We will make bold choices of what we will focus on. We will not simply stick to how we did things in the past."
Nomura also warned that it was probable that additional cases of insider trading would be uncovered. CFO Junko Nakagawa offered apologies for the scandal and said that the bank would strengthen internal measures to halt such actions. In the report, she said, "I can't say that there is no impact on our earnings. It is difficult at this stage to numerically estimate the possible damage. All we want to do is make efforts to regain trust."
Watanabe had been expected to resign since reports surfaced that regulators accused Nomura of failing to respond quickly to an investigation of rampant instances of insider trading in the Tokyo market.
Nomura admitted leaking information on share offerings by Inpex, and energy firm; Mizuho Financial Group; and Tokyo Electric Power. Equity sales staff in the institutional sales department were found by investigators to have sought out inside information on planned stock offerings from colleagues that they then passed on to investors.
Japan’s Financial Services Agency (FSA) could sanction the firm, which has already lost clients thanks to the scandal. Asset managers seeking to stay in compliance with their own rules have abandoned trading with Nomura, and the firm has also been denied the opportunity to participate in a government sale of $6 billion in shares of Japan Tobacco.