Tokyo watchdog raps DKB

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The Independent Online
JAPAN'S Securities and Exchange Surveillance Commission is recommending that disciplinary action be taken against Dresdner Kleinwort Benson, the City investment bank, for falsifying reports on mispriced client trades.

The exact action will now have to be decided by the Ministry of Finance, to whom the case has been referred. However, at least one firm has in the past been suspended from trading for two to three days for very similar offences.

The offences relate to 18 share trades which took place between April 1997 and July 1998. The firm maintains that no one has suffered any financial loss as a result of what it believes to be genuine error rather than maliciously motivated action. The firm also points out that during the same period the firm carried out 200,000 trades.

It is understood that the discrepancies totalled no more than $20,000.

However, the fact that the firm faces public censure will be a serious embarrassment particulary at a time when DKB is seeking to rebuild its reputation after the big losses which it has suffered over the last few months.

A spokesman said: "These are minor rule breaches but we always take what the regulators say very seriously, and are giving our full co-operation."

Dresdner is not contesting the ruling and has agreed to cooperate fully with the Japanese authorities. So far no individual has been disciplined.According to sources familiar with the incident, the trades were executed at prices which were different from those quoted to clients when the orders were taken. The error was later compounded by the fact that that when the discrepancies were subsequently discovered the firm neglected to inform the clients concerned.

The irregularities came to light after a regular audit by the Japanese financial watchdog.

It is believed unlikely that anyone stands to lose their job as a result.DKB employs around 200 people in Tokyo.

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