A Japanese court on Monday ordered SMBC Nikko Securities Inc. to pay a fine of 700 million yen ($5.3 million) and a forfeiture of 4.47 billion yen for manipulating the market by illegally propping up certain stock prices to stabilize them.
The Tokyo District Court also sentenced the major brokerage's former executive Teruya Sugino, 57, to 18 months in prison, suspended for three years. Five other former executives at the brokerage, including its former deputy president, are also charged in the trading scandal but their first hearings are yet to be decided.
Prosecutors had sought a penalty of 1 billion yen and a forfeiture of 4.44 billion yen against SMBC Nikko. For Sugino, they had demanded a prison term of 18 months.
According to the ruling, SMBC Nikko violated the financial instruments and exchange law by propping up the prices of 10 individual stock issues before selling them in "block offering" transactions. Sugino was involved in one of the cases.
In a block offering transaction, a brokerage mediates 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 sale prices.