The Securities Exchange and Surveillance Commission (SESC), Japan’s securities market watchdog, is set to recommend that a Tokyo-based unit of Deutsche Bank be sanctioned for spending excessively for the entertainment of pension fund executives considered public employees under the law, this revealed by sources with knowledge of the matter said on Wednesday. Under Japanese law, these acts can be argued as bribery, as the targets are considered public employees.
The SESC had been investigating this sort of “entertainment” by Deutsche Securities because the clients involved managed part of the Japanese national pension scheme, making them public employees in the eyes of the law and subject to anti-bribery statutes. Japan holds one of the largest pension funds in the world, and it seems logical that banking institutions would court their executives for a chance at the business. As such SESC is poised to recommend as soon as this week that the nation’s Financial Services Agency take administrative action against Deutsche Securities. The Financial Services Agency, which carries out the recommendations of the SESC, will most likely issue an order to Deutsche Securities to improve its business practices, the sources told Reuters on condition of anonymity because no official decision on a sanction has been announced.
In connection to this, a Deutsche Bank AG employee from its Japanese brokerage unit was already arrested today on suspicion of spending excessively on entertaining clients, a source also revealed. The source had asked not to be identified as it’s a matter for the Japanese police. NHK Television reported the arrest earlier, and said a former director of Mitsui & Co.’s pension fund unit has also been detained.