Nomura pays $25m to settle SEC charges for lack of supervision (30 July 2019)

Nomura Securities International Inc has agreed to pay $25m to settle charges issued by the US Securities and Exchange Commission (SEC) after it was found that it had not adequately supervised its traders in sales of mortgage-backed securities. 

An SEC investigation concluded that Nomura’s bond traders had made misleading and false statements in negotiations concerning the sale of commercial and residential mortgage-backed securities (CMBS and RMBS). In particular, traders had given customers misleading information about the amount of profit Nomura would receive, the amount Nomura had paid for the securities, and who had ownership of the securities. 

Nomura was found to have insufficient compliance and surveillance procedures in place. Commenting on the findings, SEC’s Chief of the Enforcement Division’s Complex Financial Instrument Unit said:

“Firms acting as dealers in opaque markets like those for CMBS and RMBS must take steps to prevent misleading communications with their customers.”

Senior Associate Director of the SEC’s New York Office, Sanjay Wadhwa, added:

“These orders underscore that firms must have adequate supervisory procedures, particularly surrounding the sale of complex instruments. Weak procedures, such as those found here, may enable employee misconduct to go undetected.”