Nomura CEO Resigns Over Insider Trading Scandal at Japan's Top Investment Bank

Kenichi Watanabe
By MALCOLM FOSTER

TOKYO -- Nomura CEO Kenichi Watanabe has resigned in the wake of an insider trading scandal that has tarnished the reputation of Japan Inc. and its biggest investment bank.

Watanabe announced his resignation at a press conference Thursday in Tokyo, ending his four year leadership of Nomura Holdings Ltd. Takumi Shibata, another top executive at the bank, also resigned.

Watanabe, 59, will from Aug. 1 be replaced by Koji Nagai, the president of Nomura Securities Co., which is part of the Nomura banking empire and at the center of the insider scandal.

Japan's financial regulators are investigating Nomura Securities for leaking information to clients ahead of planned securities offerings by energy company Inpex, Mizuho Financial Group and Tokyo Electric Power Co. in 2010.

Nomura has admitted that some its employees were involved in leaking inside information.

"Our reputation has been badly damaged," said Nagai. "To try to restore trust is easily said, but to actually accomplish that is a huge undertaking. Rather than just change our approach, we need to fundamentally rebuild the company. All corporate employees need to be involved in this," he said.

A panel of external lawyers commissioned by the company said in a June 29 report that its equity sales staff would seek information from colleagues about upcoming offerings that Nomura was underwriting and then pass along those tips to customers.

The panel made a series of recommendations to prevent such incidents in the future, including banning conversations with clients about rumors regarding financing transactions and using personal cellphones for business.

Nomura is reportedly losing underwriting business in wake of the scandal.

The company is still being investigated by the Securities and Exchange Surveillance Commission and could face penalties.

Nomura's share price has more than halved since word of the investigation first surfaced in March, falling from 417 yen to 259 yen. It was up 5.7 percent Thursday on reports of Watanabe's resignation.

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ritrdoc

Once Made in Japan meant cheap. So the Japanesse reinvented themselves, became leaders in automotive, electronics and created an enconomy that to some extent forced workers to reinvest income to keep the engines running. They presented their culture to the world, inscrutable, emanding, hard-working, sacrificing, and to a large extend homeogenous and proud, and as all cultures, rightfully so. As with most cultures there are good and bad apples, good and bad individuals. In some regards I am pleased that it is revealed there is a bad apple, it makes them more real but it doesn't make their culture wrong. It is wrong only if that is the norm, the goal, what is viewed as acceptable. It goes with nations, religions, and groups.

July 29 2012 at 7:52 AM Report abuse rate up rate down Reply
Phil Collins

Now I know where insider trading started - Made in Japan !

July 29 2012 at 5:50 AM Report abuse +1 rate up rate down Reply
IN MY OPINION ONLY

Kenichi Watanabe, who? 1 Down, 9,999 to go.

July 29 2012 at 4:45 AM Report abuse rate up rate down Reply
abourge458

PRESSURE pressure pressure..... Investment bank "X" is turning 16% average for their clients, so when bank "Y" comes in with a 14% average, the crap hits the fan at bank "Y" Duh?

Whatcha gonna do, whatcha gonna do, when the boss says: " Do better slave, or it's curtains for you! "

Morals VS huge mortgage, and foreclosure worries. Any surprises here?

July 29 2012 at 2:07 AM Report abuse rate up rate down Reply
estimatorone

Oh, come on. So this is one that got caught. How many do not
get caught? I am also sure that the guy is not going to be a
pauper either. I never feel sorry for bank CEOs that get caught
at something and actually pay for their crime. And, the japan of
today is not like it's once fuedal past - not too many of them cap
themselves for this sort of thing anymore. Why should they? None
of his worldwide colleagues would.

July 29 2012 at 2:06 AM Report abuse rate up rate down Reply
KERRY

I am sure a major bank her in the United States will hire him pronto! Crooks of a feather hang together.

July 29 2012 at 12:07 AM Report abuse rate up rate down Reply
Stephen

Japanes culture has always put a higher price on respect and honor then any other espcially American.
This is shown more directly in the banking industry. In Japan the CEO resighns in America he gets a bonus/
The same can be said for the Trustees at Penn State. They threw all the blame on the dead guy even so far as to removing his name from the school while none of them will take any responsability for letting a pedifile operate there with there suspician if not direct knowlege for at least 10 years, Says a lot of what they hold as valuable at Penn State and what the trustees want to pass on to there graduating classes!

July 29 2012 at 12:07 AM Report abuse rate up rate down Reply
ronstriathlon

Did he get a chance to donate to the Romney campaign? Is this how Romney managed to get 120 million dollars into his IRA? Insider trading is perhaps the only way.

July 29 2012 at 12:04 AM Report abuse rate up rate down Reply
injai

Trust no one!
Think of yourself first, do not feel intimidated....the real story behind the fascade is bs like this...behind every porsche etc...is either a drug dealer, thief, scammer...also called CEO, Madoff, Sophisticate etc...
Sorry, where there is money there is danger....the U.S. can put as many regulations into play as possible but it is up to us to learn and watch our backs.
Warren Buffets are rare.
Rare are those that make their money from talent.
We can only do the best we can...and pray, pray, pray.....

July 28 2012 at 10:41 PM Report abuse rate up rate down Reply
snorinlorin

There is only one honorable solution. It must be Hari Kari.

July 28 2012 at 10:32 PM Report abuse rate up rate down Reply