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LEAD: FSA punishes J.P. Morgan for stock market manipulation.

TOKYO, March 9 Kyodo


The Financial Services Agency ordered the Japan unit of J.P. Morgan Securities Asia Pte. Ltd. on Thursday to suspend part of its operations for 15 business days for manipulating the value of a Tokyo Stock Exchange futures index with a massive sum of ''cross trades'' on Nov. 4, 2004.

The order, which will go into force on Friday, was issued to discipline J.P. Morgan Securities Asia Pte. Ltd., Tokyo Branch, for the trades which contravened Article 42 of the Securities and Exchange Law, the governmental regulator said.

A J.P. Morgan trader placed a total of 15 selling and buying orders for the futures index at the same values, making the opposite orders match and guiding the index's values artificially at levels that do not mirror the market's actual conditions, the FSA said.

The trader, who put the series of orders in over a period of about 70 minutes from 1:57 p.m., was found not to have had any intention to transfer ownership rights among market participants when implementing the fraudulent deals, it said.

In addition, the Japanese arm of J.P. Morgan misled an institutional investor in November 2004 by failing to provide the investor with value appraisal reports on real estate used as underlying assets for asset-backed securities for which it was acting as a sales intermediary, the regulator said.

Besides this, the branch, brushing aside the doubts expressed by the investor on the reality of the assessments, handed over to the investor a separate set of appraisal reports at which the value of the real estate had not been written down to reflect real market conditions, it said.

The FSA imposed the disciplinary order in light of a recommendation by the Securities and Exchange Surveillance Commission to impose punitive measures on the brokerage.

The regulatory authorities slapped the company with a similar penalty in 2003 for market manipulation.
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Publication:Japan Weekly Monitor
Date:Mar 13, 2006
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