In the Media

Nomura fined ?1.75 million for weak controls

PUBLISHED November 24, 2009

The Financial Services Authority (FSA), the City watchdog, has fined Nomura ?1.75 million for ?extremely serious? systems and controls failings in the Japanese bank?s equity derivatives business.

The FSA found the bank had failed to implement controls to ensure the details of certain equity derivatives trades were entered into its systems correctly.

Trades were mismarked over five months in 2008 because of ?fundamental and systemic control failings?, the FSA said. Although trades were executed globally, the accounting systems were based in London.

Nomura received a 30 per cent discount in return for settling the investigation early and agreeing not to appeal the penalty. The original fine was ?2.5 million.

Margaret Cole, FSA director of enforcement, said: ?Firms must ensure their systems and controls develop at the same rate their business operations grow; if this doesn?t happen ? as in Nomura?s case ? they run the risk of having systems that are inadequate for their business.

?Financial instruments must be valued correctly by traders and a firm?s systems and controls must be able to minimise the risk of traders mis-marking their positions. When a firm?s systems and controls fall short of required standards, we will not hesitate to take action.?

The FSA said Nomura had taken ?disciplinary action? against the individuals involved.