April 15, 2011
SMBC Nikko Securities Inc.

Business Improvement Order by the Financial Services Agency

SMBC Nikko Securities Inc. received a Business Improvement Order (“Order”) today from theFinancial Services Agency (“FSA”) under the Article 51 of the Financial Instruments and Exchange Act,in connection with an incident where one of our professional employees in charge of sales in Japandefrauded certain customers of their money through means not connected to their accounts at SMBC
Nikko Securities, Inc.
In light of the issuance of this Order, we would like to extend our profound and sincere apology to ourcustomers and all concerned parties for the troubles and the concerns we have caused.
The Order issued by the FSA is summarized below. We humbly accept this Order and will devote ourbest efforts to prevent re-occurrence of such incidents.

1. Summary of the Order(1) Provide satisfactory explanations to the affected customers in this misconduct and exercise
thorough care in the treatment of customers.
(2) Identify root causes giving rise to this case and find out where any problems may exist.
Then, enhance and upgrade management supervision and internal control capabilities fromthe following perspectives.
A) In order to prevent the similar incident in the future, under the leadership of the
management team, re-examine the current framework of management supervision andinternal control, and formulate fundamental preventive measures. Such measures
should include checking irregular activities in the customers’ accounts for assets anddeposits/withdrawals, enhancing day-to-day cross checking procedures at each branch
office, re-examine the human resources administration practices, etc.
B) Reinforce company-wide awareness of need for compliance with relevant laws andregulations, including providing training for executives and employees.
C) Clarify management commitment toward compliance (including accountability ofresponsible persons).
D) Ensure effectiveness of internal audit functions.
(3) Submit the business improvement plan in writing to the FSA in accordance with the above by
May 13, 2011, and, execute the plan immediately. Report the progress and implementation
status regarding the above mentioned measures on a quarterly basis for the time being.

This material is an English translation of Japanese announcement made on April 15, 2011. Although the company
intended to faithfully translate the Japanese document into English, the accuracy and correctness of this translation are
not guaranteed and thus you are encouraged to refer to the original Japanese document.

2. Our Action
We have always strived to analyze the causes of past incidents and have endeavored to reexamine
our internal control in a timely manner, establishing our internal control system so as to prevent
occurrence of such fraud. However, in light of this incident, we recognize the need for further
improvement to enhance our methods for prevention and early stage detection of fraudulent activity.
We will promptly draw up our business improvement plan in accordance with the Order by the FSA,
and we will continue to enhance and strengthen our governance system and internal control
procedures, to prevent recurrence of similar incidents in the future.

###This material is an English translation of Japanese announcement made on April 15, 2011. Although the company
intended to faithfully translate the Japanese document into English, the accuracy and correctness of this translation are
not guaranteed and thus you are encouraged to refer to the original Japanese document.

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