The Financial Services Agency on Aug. 3 ordered Nomura Securities Co., Japan's securities industry leader, to improve its internal controls in the wake of a series of confidential information leaks to clients on upcoming share offerings. The order was based on a special investigation of more than three months by the Securities and Exchange Surveillance Commission into the scandal that involved information leaks on the planned public offering of a large number of shares by Inpex Corp., Mizuho Financial Group and Tokyo Electric Power Co.

The agency stopped short of ordering Nomura to suspend operations. But the brokerage should be aware of its grave responsibility for violating trading ethics. It should realize that as the nation's largest brokerage, it has the responsibility of making every effort to make Japan's financial markets transparent. It needs to strictly examine itself over the question of whether it was poisoned by the profits-first corporate culture to the point of violating basic industry ethics.

The SESC pointed out that although Nomura had internal rules aimed at preventing the leak of insider information, the reality was that such leaking had become ordinary practice. In a securities company, a firewall is supposed to be erected to prevent the flow of information between the section handling corporate capital increases and the sales section, which recommends selling or buying of shares to clients. The SESC said that by using argot or an expression like "that firm that is recently in the news," the section in charge of corporate capital increases was providing information on capital increases through public offering to the sales section.