Amid a market manipulation scandal involving Nomura Holdings Inc., several of Japan’s major financial institutions have ceased trading securities with the company, as reported by sources familiar with the situation.
Approximately 10 firms, including prominent life insurers, trust banks, and asset management companies, have temporarily halted certain business dealings with Nomura due to the incident. These individuals, who preferred to remain anonymous when discussing confidential information, mentioned that the firms might resume their transactions with Nomura for equities or bonds once the brokerage firm implements measures to prevent similar occurrences in the future.
According to Bloomberg, a spokesperson for Nomura declined to provide specific comments on the decisions made by their clients, stating that the company respects their clients’ autonomy in making transaction-related determinations.
The suspension of trading activities adds to the challenges faced by Japan’s largest brokerage firm, which has encountered difficulties on multiple fronts following allegations made by authorities last month. The accusations indicated that an undisclosed employee engaged in market manipulation of government bond futures in 2021 through the placement of substantial orders without the intention of executing them.
Subsequently, Japan’s finance ministry revoked Nomura’s primary dealer status in government debt auctions for a month. Several enterprises, such as Toyota Finance Corp., opted to seek bond underwriting services from alternative sources, leading to a decline in Nomura’s rankings and market share.
Following an investigation by the securities regulatory body, Nomura acknowledged to Japan’s financial regulator that it had indeed manipulated the bond market. In response to the allegations, Chief Executive Officer Kentaro Okuda issued an apology earlier this month during his initial public appearance after the scandal surfaced.
The brief departure of clients poses a setback for Nomura, which had been on a path to regain profitability after overcoming various global challenges, including a significant loss of nearly $3 billion linked to the collapse of investment firm Archegos Capital Management LP. Nomura witnessed its annual profits rise for the first time since Okuda assumed leadership in 2020.
