Financial instruments business operators, are you aware of the Financial Services Agency's "Collection of Administrative Action Cases"?

By making good use of the collection of administrative sanctions cases, you can review your company's internal control system and use it for in-house training and internal audits, etc.

This time we will introduce some examples of effective use, so please make use of it to improve your company's internal management system.

"Collection of administrative disposition cases"

Administrative Disposition Case CollectionThis is an Excel file that compiles cases of administrative sanctions issued by each local finance bureau and other organizations for violations of laws and regulations since fiscal 14, and is updated and published by the Financial Services Agency on a quarterly basis.

By clicking on the link for "Name of Financial Institution, etc." in Excel, you can view more detailed information about the administrative measures.

The most recent data published is as of December 6, 12.

The list includes not only financial instruments business operators (Type 1, Type 2, investment management, and advisory) and special business notifiers such as qualified institutional investors, but also examples of administrative sanctions taken against deposit-taking financial institutions, insurance companies, trust companies, money lenders, money transfer businesses, and cryptocurrency exchange businesses.

In addition, administrative actions taken against financial instruments business operators, etc. are published separately on the website of the relevant Local Finance Bureau, and the details can also be found.

(Reference) Kanto Local Finance Bureau"Administrative Actions against Financial Instruments Business Operators, etc."Please refer to here.

Once a company has received administrative sanctions, even if it makes improvements and is reborn with a more complete internal management system, the information about the administrative sanctions remains on the Internet like this for a long time, which is frightening...

How to effectively use administrative action case studies

[Reviewing your own internal control system through examples from competitors]

First, apply a filter to the "Business Type" column in the Administrative Sanctions Case Collection (Excel) to check sanctions cases for companies in the same business type as your company (competing companies in the same industry).

For example, in the case of "Investment advisory and agency business only," if you apply the filter "Business type 1: Financial instruments business operators, etc." and "Business type 2: Investment advisory and agency businesses," you can see a list of administrative sanctions against investment advisory and agency businesses from FY14 onward.

Please pay particular attention to the following:

・More recent examples
・Examples of other companies with similar business formats and service contents to ours
・Cases where the "main cause of disciplinary action" is something that your company can think of

It can be a good opportunity to review your company's internal control system by examining questions such as "Has our company encountered a similar situation (or is there a risk of it happening)?" and "Are there any elements of our internal control system that can be improved from the same perspective?"

[Used as in-house training material]

The collection of administrative sanctions cases is updated quarterly and contains relatively new information, making it easy to use as material for in-house training.

・Shared administrative sanctions cases of other companies in the same industry via email within the company to raise awareness
・Held an internal study session based on examples of administrative sanctions imposed on large competitors
・Held compliance training based on administrative sanctions imposed on other companies in the same industry over the past year.

Checking the detailed content of administrative actions can also give you an opportunity to understand recent trends and key points raised by the government.

[Use in internal audits]

The contents of the administrative sanctions case studies are acts that, if they occurred within a company, should be prevented through internal audits, etc.

For those responsible for internal audits, carefully reading the contents of the collection of administrative action cases will provide an opportunity to reaffirm the key points to focus on and the issues that need to be aware of during audits.

In addition, when conducting an internal audit, we recommend one of the audit themes/items to include, "Understanding the actual state of our company's provision of similar services and internal management, based on examples of other companies in the same industry in the administrative sanctions case collection."

My Feelings, Then and Now

Some people may recall extremely malicious/highly illegal cases when they hear the term "administrative sanctions," and think that "it has nothing to do with our company." However, when you actually look at examples of administrative sanctions, you will find that some financial instruments business operators have been alarmed by the content of the cases, such as "the necessary system for carrying out business operations appropriately was not established."

The collection of administrative sanctions cases contains candid information about the internal circumstances discovered during securities inspections, etc., so if used effectively, it can be used to improve your company's internal control system, etc.

At Support Administrative Scriveners Corporation, we provide support for the internal management of financial instruments business operators by utilizing a collection of administrative sanctions cases, such as by holding in-house training sessions on the content of past administrative sanctions and using administrative sanctions cases as internal audit items.

Support for internal management of financial instruments tradersIf you are interested, please contact us below.

Initial consultation is currently available free of charge.

(Author: Masuno)