June 24, 2022
SMBC Nikko Securities Inc.

Public Announcement of Investigation Report of the Investigation Committee

On March 4 and March 24 of this year, several of our former executive officers and employees
were arrested by the Tokyo District Public Prosecutors Office on suspicion of violation of Article
159, Paragraph 3 of the Financial Instruments and Exchange Law (illegal stabilizationtransactions), and on March 24 and April 13 of the same year were prosecuted and we as acorporation were also prosecuted under the joint punishment provision. We sincerely apologize
for the inconvenience and anxiety caused to our customers and other related parties.
We inform you that we have received today the Investigation Report of the Investigation
Committee established on March 4 this year (chaired by Kenji Kawai, the former Chief Justice of
Sendai High Court, Attorney at Tokyo Liberte Law Firm).
The Investigation Report evaluates the legal and compliance problems on trading on ouraccount of the target shares related to the block offers that we handled, as inappropriate and unfair
practices or actions that required careful consideration and response from the perspectives of (i)fair price formation, (ii) restrictions on the use of non-publicly known information that may affectinvestment decisions, and (iii) prohibition of conflicts of interest by securities companies.
We take the points raised by the Investigation Committee seriously and would like to once
again express our deepest apologies for the situation that led to the Investigation Committee
raising these points. Based on the cause analysis and the contents of the recommendations (asdescribed below) pointed out by the Investigation Committee, we will work to strengthen theinternal control system by formulating and implementing effective measures to prevent recurrence.
The "Investigation Report (Disclosure Version / Japanese only)" is attached as an appendix.
In the preparation of the Disclosure Version, some contents are not disclosed from theviewpoint of protecting the privacy of individuals involved in this case, preventing the spread oftrade secrets, etc. of companies involved in this case, and avoiding as much as possible the impact
on pending criminal proceedings.

We will continue to make improvements on a company-wide basis and strive to regain the trustof our customers and other stakeholders.
Note○Analysis of the cause of this case (applicable parts: pages 135 to 145)
1 Lack of self-discipline and systems that are commensurate with the potential risks in thesecurities business as a whole(1) Deficiency and ambiguity of business guidelines for trading on our account(2) Lack of discipline in the department in charge of trading on our account(3) Lack of effectiveness of review of trading on our account2 Lack of compliance awareness throughout the company(1) Compliance awareness at the workplace level(2) Management-level compliance awareness3 Dysfunction of the overall governance system(1) Vulnerability of the system of the Trading Compliance department itself(2) Vulnerability of check-and-balance functions of the overall compliance-relateddepartments(3) Dysfunction of the reporting system to the Board of Directors, etc.
(4) Nonexistence of a system or entity to oversee cross-divisional businesses and conduct
risk management(5) Nonexistence of a department responsible for the company-wide uniform judgment andpresentation of interpretations of laws and regulations(6) Inadequateness of the audit function of the Internal Audit department(7) Management culture that fails to make the most of the reflections of past scandals(8) Dysfunction of the whistleblowing system
4 Weak positioning of compliance in HR policy○Recommendations on measures to prevent recurrence (applicable parts, pages 146 ~ 152)
1 Conducting review and overall inspection of business operations, including how the tradingon our account should be handled
2 Raising the company-wide awareness of compliance and improving HR policies
3 Clear commitment and execution of duties by management(1) Message from management and interactive communication with the workplace level(2) Invigorate the Board of Directors, etc.
4 Strengthening the compliance system

(1) Strengthening the mindset of compliance-related departments(2) Development of effective reporting rules(3) Clarification of department to be responsible and establishment of a continuousverification cycle(4) Improving the effectiveness of internal audits premised on the existence of risks(5) Review of human and material resource allocation
5 Establishing cycle that enables early detection of fraud, prompt response, and improvementof business operations(1) Establishing a system that does not overlook the seeds of fraud(2) Nurturing corporate culture that encourages early detection, prompt response, andimprovement of business operations
Appendix・Investigation Report (Disclosure Version / Japanese only)(Note 1) We substitute proper nouns such as personal names and company names into alphabeticalcharacters.
(Note 2) In addition to the recurrence prevention measures recommended in the Investigation
Report, we have formulated and are implementing measures to prevent recurrence for the time
being. The outline is as described in (Reference).

(Reference) Our immediate preventive measures
We established a project team (Internal Control System Strengthening PT) within thecompany on March 14, 2022, in order to fundamentally review our internal control system
across the organization. This PT promotes analysis of true cause, and formulates andimplements immediate measures to prevent recurrence. The following is the status ofimplementation of immediate measures to prevent recurrence corresponding to therecommendations of the Investigation Report.
1 Conducting review and overall inspection of business operations, including how the tradingon our account should be handled
・ Suspended new handling of block offer trading (since June of last year)
・ Implementing reorganization of transaction types of trading on our account and stricter
transaction rules (partially revised internal rules in May this year, and relevant changes arescheduled to be made in the future as necessary)・ Refining the sale and purchases review standards for trading on our account (addition ofpoints to be considered for trade screening, expansion of transaction types subject to event
examination, etc. were already implemented)
・ Conducted questionnaire for all managers in the branches to identify potential risks (Marchto April of this year)
2 Raising the company-wide awareness of compliance and improving HR policies
・ Continuously implementing officers’ discussions on the true cause analysis and future
response policies at the Board of Directors meetings, Management Committee meetings,
and the meetings of the officers in charge of departments
・ Conducted compliance training for executive officers and department/branch managers byoutside lawyers on this matter (March this year).
・ Conducting training for all employees on preventing unfair trade (July last year, March thisyear)
・ Holding sessions to review of the Investigation Report (attached material) attended by allemployees (scheduled to be held as part of the Management Philosophy Meeting to be heldfrom July of this year)
・ Implementing hearing of opinions from all executive officers and senior general manager,in order to revise and permeate the Code of Conduct throughout the company (partialrevision of the Code of Conduct is scheduled to be implemented within this year afterdiscussions at various meeting bodies)・ Reviewing the evaluation and compensation system for employees (introduction of 360degree evaluation, etc.) (within this year)
3 Clear commitment and execution of duties by management
・ Townhall meetings in all departments and branches led by management committee
members incl. the president (planned for the second half of this financial year)
・ Out of the potential risk events received in the department/branch manager questionnaire,
listing the priority response issues and implement progress management at theManagement Committee meetings (continuously being handled)・ Holding individual interviews by officers specially in charge of Internal Control System
Strengthening PT with department/branch managers who responded to the above
questionnaire (continuously being handled)
・ Appoint as a non-executive director a former deputy president who is familiar withsecurities business (June of this year)

・ Conducting questionnaire on all officers and employees regarding acts of concern forviolation of the Financial Instruments and Exchange Act (April-May of this year).
4 Strengthening the compliance system
・ Strengthening the trading compliance function for trading on our account (the departmentin charge of trading on our account was newly established, the number of personnel of therelevant section was increased, and we will add relevant measures in the future asnecessary)・ Strengthening the system in the trade screening process (from June of this year)
・ Conducting a company-wide risk identification survey on business operations by the Audit
Department (planned for April to July of this year)
・ Formulating a Target Operating Model (Note) to strengthen the internal control system byutilizing external consulting firm (from April of this year)
5 Establishing a cycle that enables early detection of fraud, prompt response, and improvementof business operations
・ Establishing a framework for integrated management of important issues to be addressedby management (started operation in June of this year)
・ Sending message from the top on the whistleblowing system (May of this year)
・ Conducting training for managers to improve the psychological safety necessary to create aworkplace where employees can speak up easily (plan to be held for all managers from
July to August this year)(Note) Target Operating Model means the model that our company aims to be our goal in termsof business content, organizational posture, and staffing.