Japan's financial regulator penalised the Japanese brokerage unit of J.P. Morgan Chase & Co on Thursday, ordering it to halt some operations for three weeks for manipulating prices in stock futures trades.
The Financial Services Agency (FSA) said the Tokyo branch of J.P. Morgan Securities Asia Pte Ltd broke securities laws by placing a series of specious buy and sell orders on the Tokyo Stock Exchange on a single day in November 2004.
Separately, the FSA also issued a one-week suspension to the brokerage's real estate finance division for misleading a client in a bond transaction. It was J.P. Morgan's second suspension by the FSA in three years. In February 2003 it was hit with a 10-day stock trading ban for manipulating share prices in connection with exchangeable corporate bonds.
"It's very unfortunate that a company that was punished for a similar violation once has received another penalty," an FSA official told reporters. "It shows that their internal controls have been inadequate."
In a statement, J.P. Morgan said it took the matter "extremely seriously" and was "determined to further strengthen and implement our internal regulatory compliance measures to prevent recurrence of similar incidents".
According to the FSA, an investigation by the watchdog Securities and Exchange Surveillance Commission found that on November 4, 2004, a J.P. Morgan futures trader placed a string of simultaneous buy and sell orders for contracts linked to Japan's TOPIX share index.
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