| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
 |
advertisement | ||
Thursday March 9, 6:26 PMJapan penalises JPMorgan over stock futures tradesTOKYO, March 9 (Reuters) - Japan's financial regulator penalised the Japanese brokerage unit of JPMorgan Chase & Co. on Thursday, ordering it to halt some operations for three weeks for manipulating prices in stock futures trades.The Financial Services Agency (FSA) said the Tokyo branch of J.P. Morgan Securities Asia Pte. Ltd. broke securities laws by placing a series of specious buy and sell orders on the Tokyo Stock Exchange on a single day in November 2004. Separately, the FSA also issued a one-week suspension to the brokerage's real estate finance division for misleading a client in a bond transaction. It was J.P. Morgan's second suspension by the FSA in three years. In February 2003 it was hit with a 10-day stock trading ban for manipulating share prices in connection with exchangeable corporate bonds. "It's very unfortunate that a company that was punished for a similar violation once has received another penalty," an FSA official told reporters. "It shows that their internal controls have been inadequate." In a statement, J.P. Morgan said it took the matter "extremely seriously" and was "determined to further strengthen and implement our internal regulatory compliance measures to prevent recurrence of similar incidents". According to the FSA, an investigation by the watchdog Securities and Exchange Surveillance Commission found that on Nov. 4, 2004, a J.P. Morgan futures trader placed a string of simultaneous buy and sell orders for contracts linked to Japan's TOPIX share index. The orders effectively cancelled each other out, but due to their number and large size they had the effect of pushing down the volume weighted average price of the index, the FSA said. The empty transactions allowed the trader to control position-related risks and may have allowed the brokerage to profit from lower purchase costs on the futures. J.P. Morgan told SESC investigators it did not intend to manipulate the market and did not profit directly from the trading tactic, another FSA official said. In the second incident, J.P. Morgan's real estate finance division gave the buyer of a real estate-backed corporate bond an inflated estimate of the value of the underlying property, the FSA said. J.P. Morgan failed to disclose to the buyer, an unnamed institutional investor, estimates of a decline in the property's value compared with previously listed prices, the agency said. The transaction also took place in November 2004. The FSA ordered J.P. Morgan to suspend all stock index futures trading on its own account for 15 business days between March 10 and March 31. It also ordered the brokerage not to accept new business at its real estate finance division between March 10 and March 16, and to tighten its internal controls. |
|||
|
Copyright © 2005 Reuters Limited. All rights reserved. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of Reuters Limited
|