Japanese stock market regulators suggests government penalize "BNP Paribas"

Japan"s Financial Services Authority recommended that the Japanese government punish "BNP Paribas Securities", the Japanese brokerage division of "BNP Paribas" SA, over a 2008 convertible bonds issue, by now defunct developer "Urban" Corp.

In June 2008, "Urban" announced it would sell convertible bonds worth 30 billion yen to BNP, without mentioning the two companies had a swap agreement. "Urban" only revealed this agreement on August 13th, when it asked the court for protection against its creditors.

Due to the agreement it had made with BNP and the significant drop in its stock price in the beginning of July, "Urban" raised a lot less than the 30 billion yen it had planned.

On the other hand, the Securities Commission of Japan (SESC) recommends sanctions against "BNP Paribas" for violation of stock market regulations. According to the SESC, the company made mistakes and omitted mentioning certain aspects in the documentation it was supposed to submit to the authorities concerning plans to improve its internal audit.

The SESC also said that a trader of the Japanese division of BNP, violated financial regulations in November 2008, when he placed specific buy orders. According to the SESC, - which did not name the company the stock of which was the object of the transaction, the trade was artificial.

In 2002, the French bank received a 10-day ban due to manipulating stock prices for undisclosed stocks. This time, the bank could receive a sizeable fine, and have its operations temporarily suspended.

BNP officials say they were not yet notified on the result of the FSA"s investigation.