Scandal-tainted brokerage houses acknowledged Tuesday that they paid favored clients nearly $863 million in compensation for investment losses, far more than had previously been reported.
The stock market reacted to the news strongly in early trading Tuesday, with the main index falling 1.9 percent in morning trading before recovering in the afternoon to close higher.The new disclosures were made after Finance Minister Ryutaro Hashimoto told the brokerages to stop the compensation payments, which have enraged small investors who did not receive preferential treatment.
Daiwa Securities Co., Yamaichi Securities Co. and Nikko Securities Co. acknowledged paying favored clients $324 million more than was previously reported.
When added to compensation paid to clients by Nomura Securities Co., the world's largest brokerage, the total is $863 million.
Hashimoto on Monday ordered the brokerages to curtail business for four days, a punishment analysts called a slap on the wrist.
The companies immediately agreed and announced that dozens of employees, including top executives, would take salary cuts and that six would resign.
The presidents of Nomura and Nikko resigned two weeks ago after newspapers reported that, in addition to making paybacks, those two brokerages arranged loans for a former organized crime boss.
Susumu Ishii, former leader of the Inagawa-kai underworld syndicate, bought 11 million shares of Tokyu Corp. stock through Nomura.