Japan orders Nomura to 'improve' after scandal

The regulator of Japan's financial sector on Friday ordered Nomura Holdings to "improve" its operations after a string of embarrassing insider trading cases at the country's biggest brokerage. The Financial Services Agency (FSA) issued a "business improvement" order against Nomura, agency chief told reporters Friday, after the nation's securities watchdog called on the government to take "administrative action" over lax controls. The firm received no fine. Japanese authorities are carrying out a wide-ranging probe into insider trading which, although illegal in Japan, is widespread and carries only token penalties. The probe comes following renewed pressure to crack down on lax regulations and legal loopholes which have dented the nation's corporate governance image. "We expect Nomura to work hard to recover people's trust," Financial Services Minister Tadahiro Matsushita told a Tokyo press briefing as he announced the token sanction. "We hope that the company will carry out a fundamental review of its internal systems that will bring change under the new leadership," he added. Last week, Nomura chief executive Kenichi Watanabe and chief operating officer Takumi Shibata said they would step down to take responsibility for staff leaking material information to clients. In June, Nomura released the findings of a damning report that warned the firm was overrun with "serious systemic defects that would erode confidence in (Nomura) as a securities company". The company report said the firm's sales staff tipped off clients about share sales and information often flowed freely between the sales department and Nomura's investment banking and research side, which is usually barred. Nomura shares were down 1.81 percent at 270 yen in afternoon trading. -- Dow Jones Newswires contributed to this article --