Japan Brokers Vow Voluntary Reform Plans

Japan’s Big Four brokerages said Friday that they would introduce voluntary reforms after the industry’s massive scandal.

The reforms, unveiled at a managers meeting, were aimed at such practices as the compensation of favored investors for their losses and business links with gangsters, which drew government sanctions and have angered the general public.

Japan’s four largest brokerage firms--Nomura, Daiwa Securities, Nikko Securities and Yamaichi Securities--said they would put top priority on meeting clients’ interests.

“We should think about the clients’ standpoint and interest first,” Nomura Securities President Hideo Sakamaki said.

“If we are intent on contributing to customers’ prosperity, Nomura’s prosperity will naturally come later,” said Sakamaki, who took over the world’s largest securities firm on July 8 after President Yoshihisa Tabuchi resigned over the scandals.

“We must be reborn . . . even if it takes many years,” he was quoted as saying to Nomura’s 400 branch and section managers.

The four firms hold regular meetings every six months, usually aimed at forecasting the stock market direction and at formulating business policy.

This time the main objective was how to regain public trust.

The four brokerages have publicly apologized for making up investment losses of elite clients. Nomura and Nikko also admitted to links with organized crime.

Nomura came under further pressure because of an allegation that it broke the law by artificially boosting a railroad company’s stock price to benefit gangsters.

Industry sources said Sakamaki’s message on Friday indicated an apparent switch in Nomura’s management policy that previously made increasing earnings its first and only priority.

It could, however, take a long time to change the company’s corporate culture, they said.

For years Nomura has been known jokingly as “Noruma” (Norms), meaning that it set high sales targets and forced salesmen to achieve them.