Scandal at Broker Unit of Japan’s SMFG Brings Stock Downgrade
Scandal at Broker Unit of Japan’s SMFG Brings Stock Downgrade
(Bloomberg) -- Japanese megabank Sumitomo Mitsui Financial Group Inc. received a stock downgrade by its peer in the wake of allegations of stock market manipulation at its brokerage unit.
Mitsubishi UFJ Morgan Stanley Securities Co. lowered its rating on Sumitomo Mitsui to neutral from overweight, saying “the issue may be seen as a problem with group-level governance,” hurting the appeal of the shares.
“There are growing uncertainties surrounding the case, including how long the case will take, what kind of administrative measures will be taken, when, and for how long they will last,” MUFJ analyst Natsumu Tsujino wrote in the report published after Friday’s market close in Tokyo. The firm is a joint venture of Japan’s largest bank Mitsubishi UFJ Financial Group Inc. and Morgan Stanley.
Shares of Sumitomo Mitsui closed 1.8% lower, after Tokyo prosecutors on Thursday charged its brokerage arm SMBC Nikko Securities Inc. and five of its staff members with alleged stock market manipulation. The charges followed months of investigations by the enforcement arm of Japan’s Financial Services Agency, the market regulator, into the practice at the brokerage.
Sumitomo Mitsui still has nine buy ratings versus four hold recommendations and no sells, according to data compiled by Bloomberg. Japan’s largest brokerage Nomura Holdings Inc. suspended its rating on Sumitomo Mitsui earlier, without providing a reason.
©2022 Bloomberg L.P.