Nomura faces pressure over trading leaks Nomura is coming under increasing political pressure to strengthen its internal controls and take responsibility for the leaking of non-public information by staff in three insider trading cases. Comments by a senior parliamentarian from the ruling DPJ party and the new financial services minister indicate that the Japanese bank is likely to face administrative action over its role in the cases. The comments are highly unusual for Japanese politicians and reflect concern among DPJ lawmakers about the damage that a weak response to the leaking of inside information would inflict on the reputation of Japan's capital markets. They also indicate that the level of any penalty the bank will pay depends on its ability to convince regulators that it has a sufficiently robust plan to strengthen internal controls and ensure sensitive information does not get leaked. "I believe the Financial Services Agency will take strong action [against Nomura]," Tsutomu Okubo, senior director of the DPJ's committee on financial affairs, told the Financial Times. "In Nomura's case, the Chinese wall [separating investment banking from sales] failed to function, not once, but three times, which means their governance was not working," Mr Okubo said. The parliamentarian said he expects the financial regulator to impose a penalty on Nomura after the bank discloses how it will deal with its weak internal controls. "First, Nomura has to announce [its measures], then the FSA will impose administrative guidance," Mr Okubo said, adding that the law should be amended to strengthen rules against insider trading and prevent the problems being repeated. His comments followed similar remarks by Tadahiro Matsushita, the new financial services minister, who said on Tuesday that the FSA would "watch carefully how [Nomura] comes to terms with the facts of its involvement in leaking inside information and how it intends to tackle the situation," in determining any penalty. Nomura admitted last week that some of its employees provided non-public information to First New York Securities, which was ordered to pay Y14.68m ($185,000) by the Japanese regulator for trading on inside information about a new share issue by Tokyo Electric Power in 2010. The bank expressed its regret and apologised for the trouble caused by its involvement in the insider trading case. Nomura also expressed regret in two other cases of the leaking of inside information - on Inpex and Mizuho - to fund managers. Regulators have recommended penalty fees in these cases. Toru Nakagawa, a lawyer, said: "There needs to be a system to check that information is not being leaked and to block any trades if it appears that there was a leak." Nomura said it could not comment while its investigations were continuing. Mr Okubo is leading a DPJ effort to strengthen Japan's market against possible insider trading and regain investor confidence in the market. The disclosure by Nomura came as regulators in leading markets are cracking down on insider trading. Japan's financial regulator has recommended penalties in three prominent cases of alleged insider trading, following widespread market concerns that sensitive information about new share issues was frequently leaked to specific investors. Nomura, which was reprimanded by the regulator in 2008 for insider trading by an employee, is being investigated by the Securities and Exchange Surveillance Commission and is conducting its own internal investigation into the allegations. The bank plans to unveil the results of its internal investigation this month.