Business, Finance & Economics

Kenichi Watanabe, CEO of Nomura, resigns over insider trading

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Japan's securities firm Nomura Holdings Chief Executive Kenichi Watanabe enters a room to announce his resignsation at a press conference at the company's headquarters in Tokyo on July 26, 2012. The head of Japan's biggest securities firm resigned on July 26 in the wake of an embarrassing insider trading scandal, part of a widening national probe into the widespread practice. AFP PHOTO / Yoshikazu TSUNO (Photo credit should read YOSHIKAZU TSUNO/AFP/GettyImages)

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YOSHIKAZU TSUNO/AFP/GettyImages

In yet another blow to the reputation of investment banks, the chief executive of Tokyo-based Nomura has resigned amid allegations of insider trading.

Kenichi Watanabe was joined by his chief operating officer Takumi Shibata in announcing his resignation Thursday after revelations emerged that employees at the bank shared privileged information with traders.

“I take this insider issue very seriously,” he said after being asked why he resigned, reports Business Week. The magazine also reported that Japanese regulators this year are investigating accusations that Nomura employees gave tip offs about planned share offerings for several Japanese firms to short sellers before the offerings were publicly announced.

The company indicated there may be more cases of insider trading than those identified by regulators. “There are certain other cases in which there are high possibilities that corporate-related information were communicated by our employees to our clients,” Nomura said in a statement today. “We intend to restore the confidence that we have lost in the capital markets.”

The New York Times reports that Nomura has struggled since absorbing Lehman Brothers’ international operations at the height of the financial crisis in 2008. British bank Barclays and Nomura took over Lehman’s in a series of “bold, risky bids to bolster their global standings”.

But now Barclays has suffered allegations of manipulating a key interest rate and Nomura is struggling with allegations of leaking privileged information.
Reuters
reports the resignation comes one month after the bank cut Watanabe’s pay in half for six months after its brokerage unit's third insider trading scandal since he became CEO four years ago.

"When you look at their history, the number of scandals, this was the last straw," Jim Sinegal, an analyst with Morningstar research house told Reuters.

Koji Nagai, president of Nomura’s domestic brokerage, will succeed Watanabe on Aug. 1, Nomura said Thursday. Chief Operating Officer Takumi Shibata will be replaced by American unit chief Atsushi Yoshikawa.