The arrest of an employee of Nomura Securities Co. along with two acquaintances on suspicion of committing insider trading could lead not only to a loss of customers' confidence in the major securities house but also to the undermining of investor trust in Japanese stock markets. The incident points to a need to strengthen the education of employees of securities houses regarding regulations and to improve in-house systems to ensure they comply with them.
The Nomura employee, a Chinese man who studied at a Japanese university, joined the company in February 2006. He worked with the firm's corporate information division until December before being transferred to Hong Kong. The division is in charge of dealing with information on corporate mergers, acquisition and takeover bids — a growing business field.
The employee apparently took advantage of the firm's intention to let him have as much experience as possible through on-the-job training. He served as an assistant to more experienced employees, and was given access to confidential information. The Securities and Exchange Surveillance Commission suspects that he started engaging in illegal acts about four months after he joined Nomura.