Financial Services Agency

i SECURITIESAdministrative actions against joint stock companies June 27, 2020 Kanto Local Finance Bureau 1. i SECURITIES (Minato-ku, Tokyo, corporation number 9010401057968) (hereinafter referred to as "our company") was found to have the following problems as a result of an inspection. (Dated June 17, 2022). (1) Unregistered investment management business i SECURITIES Ltd. (hereinafter referred to as “our company”) operates an anonymous partnership “arbitrage system fund” operated by arbitrage system fund company limited (a corporation registered in the British Cayman Islands, hereinafter referred to as “as company”). (hereinafter referred to as “Arbitrage Fund ⅰ”) as the sole qualified institutional investor. ), and as of the inspection reference date (August 24, 2020), it is said that it is handling private placements of equity interests in arbitrage fund ⅰ and managing investments. In addition, company as submitted a notification (hereinafter referred to as the "special notification") regarding special business for qualified institutional investors, etc. (hereinafter referred to as the "special business") to the Director of the Kanto Local Finance Bureau on November 2, 2011. At the same time, submit a special notification based on Article 3, Paragraph 1 of the Supplementary Provisions of the Act for Partial Revision of the Financial Instruments and Exchange Act on August 31, 2016 (Act No. 32 of 2015) , As of the reference date of the inspection, as a special business, it is conducting self-management business of arbitrage fund ⅰ. In addition, arbitrage fund ⅰ is a foreign investment securities powerfund (hereinafter referred to as the “Foreign Investment ) through investment in foreign exchange trading and foreign exchange option trading. However, Mr. Katsuo Fujishiro (hereinafter referred to as "Mr. Fujishiro"), who is the sole executive and employee of as Company, is involved in the management of arbitrage fund i, in addition to finding investment candidates and negotiating investments with investment candidates. We do not engage in investment management operations such as deciding on investment destinations based on investment decisions, executing investments, managing post-investment operations, or disposing of securities acquired through investments. was taken. Specifically, by around August 2011 at the latest, the Company will become the asset manager sti wealth management (cayman) limited (a corporation registered in the Cayman Islands, British Territory; pf limited, hereinafter referred to as "sti"). , investigated and analyzed the content of the foreign investment securities, and conducted negotiations regarding investment with candidate investment destinations and discovery of investment destination candidates for arbitrage fund i. In addition, based on the investigation and analysis of the Foreign Investment Securities, the Company will, by around October 2011 at the latest, make an arbitrage fund i based on its own investment decisions without explaining to or consulting with Mr. Fujishiro. (hereinafter referred to as the "Tokumei Kumiai Agreement") and a special notification form, etc., using the special business system, and using as company as the nominal operator. i decided to invest in the foreign investment securities through the composition of In August 2010, Mr. Fujishiro assumed the position of representative of as Corporation. asked to be a person. Furthermore, from November 2011, when the Company began handling private placements of equity interests in arbitrage fund ⅰ, to August 2020 (hereinafter referred to as “during this period”), the Company will operate arbitrage fund ⅰ. In order to acquire the foreign investment securities with our assets, we will continue to repeatedly and continuously transfer the foreign investment securities from the investment management account in the name of as company based on our own investment decisions without asking Mr. Fujishiro for his judgment. Executed investment by remittance of purchase price of investment securities. In addition, in order to pay cancellation fees or distributions to the investors of arbitrage fund i during this period, the Company will continue to make repeated and continuous payments based on its own investment decisions without seeking judgment from Mr. Fujishiro. , sold the foreign investment securities held in the assets of the arbitrage fund i, and disposed of the securities acquired through the investment. In addition, regarding the operation and management of arbitrage fund ⅰ, which is said to be performed by as company in the Memorandum, during the term of this matter, sti company repeatedly and continuously will not seek judgment from Mr. Fujishiro. , by obtaining and analyzing materials related to the management status of the assets of the foreign investment corporation, we manage and understand the management status, and based on our own investment decisions, invest in the foreign investment securities. continued to manage arbitrage fund i. In addition, in the Silent Partnership Agreement, as company shall receive an annual rate of 2.0% of the total net assets on the last day of each calculation period as a management fee for arbitrage fund i. However, while there is no special provision in the Memorandum, etc., the Company, without obtaining Mr. Fujishiro's approval, calculated the amount of remuneration for as company at an annual rate of 0.2%, and the remaining received an amount equivalent to 1.8% of the annual rate in the name of administrative management fees. In this way, company as is only a nominal operator of arbitrage fund i. As a business operator, based on investment decisions based on analysis of the value, etc. of the Foreign Investment Securities, it is believed that the money received from the investors of Arbitrage Fund ⅰ was managed mainly as an investment in the Foreign Investment Securities. Is recognized. The above act by the Company falls under the category of investment management business as stipulated in Article 28, Paragraph 4 of the Financial Instruments and Exchange Law (acts listed in Article 2, Paragraph 8, Item 15 of the same law), and the Company Conducting an investment management business without obtaining a change registration pursuant to Article 31, Paragraph 4 is deemed to be a violation of Article 29 of the Act. (2) Business operations that pose problems in terms of investor protection, as described in (1) above, the Company actually became a de facto operator of arbitrage fund ⅰ and operated the arbitrage fund without registration for a long period of time. In spite of the fact that it was managing ⅰ, it handled the private placement, etc. by explaining to the investors using materials stating that company as would manage the arbitrage fund ⅰ as the operator. was In addition, as of the inspection reference date, in addition to arbitrage fund ⅰ, the Company has established an anonymous partnership, ``arbitrage system fund ⅱ,'' whose operator is asproduct ⅱ company limited (a corporation registered in the British Virgin Islands) and whose investment target is the foreign investment securities. (arbitrage system fund ii)” (hereinafter collectively referred to as the “Special Fund 2 Fund”), Ai Global Asset Management Co., Ltd. (Minato-ku, Tokyo, corporate number 9010001065933, former financial instruments business operator (On December 24, 2021, the Commissioner of the Financial Services Agency canceled the registration of the financial instruments business), issued shares 40% of which is held by the Company. However, as a financial instruments business operator, when selling new financial instruments, we will take into account the suitability principle, etc., and from the perspective of ensuring proper performance of investment solicitation, we will not Due to a lack of awareness of the need to examine and evaluate the customers to whom the products are to be sold, based on an appropriate understanding of , Sufficient product examination was not conducted from this point of view when selling the Special 2 Fund and the Publicly Offered Investment Trust. Furthermore, while the Company has not established internal rules that stipulate specific monitoring methods for the financial instruments it handles, it has obtained materials from sti regarding the asset management status of the Foreign Investment Corporation regarding the Special 2 Fund, It is said that monitoring was carried out by confirming and analyzing this. However, according to these materials, events that have a significant impact on the marketability of the Exception 2 Fund, such as significant changes in the asset management method of the Foreign Investment Corporation by sti since around 2015 However, the Company overlooked these events and did not provide timely explanations to investors. In addition, around June 2018, the General Manager of the Administration Department at that time was aware of the problem, such as recognizing that no legally required investment report related to the Special 2 Fund had been prepared and issued. Despite this, the Company has neglected this without taking any special measures. In this way, under an extremely sloppy business management system and internal control system, the Company did not provide customers with timely and appropriate information that is important for making investment decisions. Each was sold to 48 people (total amount of about 470 million yen), and the publicly offered investment trust was sold to 145 people (total amount of about 1.5 billion yen). The above business operations at the Company are deemed to fall under Article 51 of the Financial Instruments and Exchange Act, "when necessary and appropriate for the public interest or investor protection with respect to business operations." 2. Based on the above, the following administrative actions were taken against the Company today pursuant to the provisions of Article 51 of the Financial Instruments and Exchange Act. [Business Improvement Order] (1) Analyze the cause of this matter, formulate measures to prevent recurrence, such as establishing a business management system, business operation system, and internal control system to properly conduct financial instruments trading operations, and implement them steadily. be implemented. (2) Clarify the location of responsibility for this act. (3) Appropriately explain the details of the administrative disposition to the customer. (4) Report the above responses and implementation status in writing by Wednesday, July 27, 2022, and thereafter, as needed until all of them are completed.