第一プレミア証券株式会社

1. Situations where management's operations are deemed significantly inappropriate: a. Violations of business improvement orders: i. Background leading to the business improvement order: Daiichi Premier Securities Co., Ltd. was found during a 2015 inspection to have engaged in activities where investments in funds operated by qualified institutional investor exception businesses were made, with actual investments effectively borne by the reporting entity, not qualifying as qualified institutional investor investments. Additionally, the company had conducted minimal monitoring of the relevant funds. As a result, the company received a business improvement order from the Kanto Financial Bureau based on the Financial Instruments and Exchange Act, requiring investigation into the root causes of the issues and the establishment of proper management and internal control systems. ii. Response to the improvement order: The company concluded that the root cause was its historically unprofitable condition, combined with management led by representatives invited under the influence of the then 100% shareholder, prioritizing profits over compliance with laws and investor protection, resulting in neglect of proper management and internal controls. To prevent recurrence, the company established a new review committee comprising external experts to examine compliance and management practices, and submitted a report detailing improvement measures in August 2016. After submission, the shareholder changed to Company A at the end of December Reiwa 5 (2023), and subsequently sold the shares. iii. Non-fulfillment of improvement measures: The company's representative director and another director met with third parties claiming to be shareholder proxies, discussed business development and new projects without consulting the review committee, and concealed the involvement of these third parties. These actions constitute a failure to implement the improvement measures and violate the improvement order. b. False reporting in response to reporting orders: In February Reiwa 6 (2024), the company falsely reported that third parties were not involved in management when, in fact, they were, thereby leading illegal conduct. 2. Lack of officer qualification: The company has officers with insufficient awareness of compliance, and management repeatedly violated laws to expand profits, failing to establish appropriate management and internal controls. As a result, the company is deemed to lack the necessary qualities for fair and accurate execution of financial instruments business.