The Securities and Exchange Commission charged the US arm of Japanese investment bank Mizuho Securities for its failure to safeguard information pertaining to stock buybacks by its issuer customers. During a two-year period, Mizuho traders regularly disclosed material nonpublic customer buyback information to other traders and Mizuho’s hedge fund clients. That information included the identity of the party placing the order, the order size, limit price, and indications that the orders were buyback orders.
Such information was routinely communicated across trading desks, notwithstanding that during the relevant period Mizuho executed over 99.8% of all buyback orders by using algorithms, rather than through trader-negotiated open market trades. Mizuho consented to the order imposing a $1.25 million penalty, a censure, and ordering it to cease and desist from committing or causing any future violations.