Nomura, Nikko Sending Letters of Apology to Clients over Scandal
Aug. 08, 1991
TOKYO (AP) _ Two of Japan's biggest brokerages have started sending millions of letters apologizing to their clients for a scandal in which they compensated favored customers for stock market losses.
Nomura Securities and Nikko Securities said Thursday they were mailing the letters or hand-delivering them through branch offices throughout Japan.
They and 15 other brokerages have acknowledged paying nearly $1.26 billion to nearly 600 favored customers.
Such compensation is not illegal in Japan unless promised in advance, but it has brought charges of unfairness in the securities industry and of lax supervision by the Finance Ministry. The ministry issued guidelines in 1989 against such paybacks.
Noriko Kadota of Nomura's Public Relations Office said that in its letters, the company expresses deep regrets and promises that to restore public confidence in the stock market, it will stop such practices.
She would not discuss the number of letters sent, but Nomura a total of 5 million clients have accounts with the company.
Besides the compensation issue, Nomura and Nikko were alleged to have ties with organized underworld figures.
Also on Thursday, two gun-wielding members of an extremist right-wing group were arrested after holding a Nomura official hostage for more than an hour in an apparent protest against the scandal, police said.
One fired a shot into the electronic board displaying stock prices during the 90-minute standoff, police said. No one was injured. The other's gun turned out to be a fake, they added.
Meanwhile, Kyodo News Service said corporations, discouraged by dim prospects for the stock market, are withdrawing from specified money trusts and other investment trusts.
Quoting data compiled by the Trust Companies Association of Japan, Kyodo said net assets of such investment trusts had shrunk by more than 5 trillion yen, or abouT $36.9 billion, at the end of June from the previous year's level.
Kyodo quoted an unidentified association official as warning that the shift of funds from investment trusts would accelerate because investor confidence in the stock market has been lost in the wake of the brokerage payout scandals.
Investment trusts, managed by trust companies on behalf of corporate investors, mostly invest in stocks and other securities.