The Japan insider trading scandal that caused Nomura CEO to resign shows that regulation of the financial markets is a global concern.
Given the lingering fallout of the economic crisis of 2008 and recent scandals, the widening case at Nomura scandal reveals that the pressure of the global financial crisis has taken a toll in the Japanese financial system.
Japan has always taken pride in having an honest culture and well regulated financial system, but it seems that human nature takes over regardless of cultural background. Perhaps traders and bankers were pressured to deliver profits to investors at all costs. But this is not the first time a scandal has erupted in Japan.
Nomura CEO Kenichi Watanabe and, his right hand man, Takumi Shibata, resigned last week over the growing scandal. Moreover, the Japanese investment bank warned other insider trading cases could come to light.
Mssrs. Watanabe and Shibata were said to be the architects of Nomura’s takeover of the Asian and European assets of Lehman Brothers. And their departures pose serious questions about their global expansion strategy. However, Mr. Nagi reportedly said that he had no intention of dropping Nomura’s ambition of being a global investment bank.
Meanwhile, Watanabe’s resignation had been expected since there were indications that the bank’s chieftains were at loggerheads with Japan’s financial regulators. In fact, some of these regulator’s accused Nomura of being slow to respond to an investigation into insider trading that had run amok in the Tokyo market.
In the end, Japan’s global investment banking sector has been hit hard recently by falling trading and advisory income as clients retreat from markets due to the euro zone crisis, the Libor rate setting scandal and by political calls for a “change of culture.” Now one has to wonder whether the Nomura scandal will be a blow to Japanese pride.
(Kyle Colona contributed to this article)
