SMBC Nikko Securities Inc. said Friday an investigation panel looking into the major Japanese brokerage's market manipulation scandal has called it an "inappropriate and unfair act," adding the incident was not prevented because of a failure in its corporate governance system.
In a report handed to the brokerage firm on Friday, the panel said SMBC Nikko employees lacked a sense of social norms that could have prevented the scandal, which led to the indictment of the company's former deputy president and five others.
The scandal involved transactions called "block offerings," which sees a brokerage meditate trading between large shareholders who want to sell chunks of shares and investors hoping to buy them during off-hours trading. The brokerage profits from the difference between the purchase and sales price.
SMBC Nikko was also indicted by the Tokyo District Public Prosecutors Office in March.
While block offerings are common and legal, the prosecutors suspect that the stock prices were illegally propped up so the transactions would not fall through.