* Firm likely to be ordered to improve business practices
* Move part of wider probe into pension client entertainment
TOKYO Dec 4 Japan's securities watchdog will
recommend that a Tokyo-based unit of Deutsche Bank be
sanctioned for excessive entertainment of pension fund
executives, sources with knowledge of the matter said on
The Securities Exchange and Surveillance Commission (SESC)
has been investigating entertainment by Deutsche Securities
because the clients involved managed part of the Japanese
national pension scheme, Reuters reported in September. As such,
the executives are subject to anti-bribery statutes.
The watchdog found that Deutsche Securities employees spent
a total of between 6 million and 9 million yen ($58,600 to
$87,900) to entertain officials of three pension funds between
2010 and 2012 in return for them investing in financial
products, the Nikkei newspaper reported earlier on Wednesday.
A spokesman for Deutsche Securities in Tokyo declined to
The probe is part of a wider investigation into the wining
and dining of pension fund executives triggered by a 2012
scandal in which Tokyo-based money manager AIJ Investment
Advisors was found to have defrauded pensioners out of more than
Lavish entertainment was one of the tools AIJ used to
attract investment from dozens of employee pension funds
partially invested in the national pension scheme, regulators
found in that case.
The SESC is planning to apply a clause in the financial
instruments law against "providing special benefits" to clients
in recommending the sanction, which it is expected to make
official soon, the sources said.
The Financial Services Agency, which carries out the
recommendations of the SESC, will likely issue an order to
Deutsche Securities to improve its business practices, the
sources told Reuters. The sources spoke on condition of
anonymity because no official decision on a sanction has been
Deutsche had already started its own investigation into the
matter before the SESC began a regular audit of the German
bank's Japanese business in May, sources told Reuters in
The firm has stopped marketing directly to such pension
funds as part of a review of its sales and compliance practices,
the sources said.