Press Conference by ASO Taro, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services

(Excerpt)

(Tuesday, May 25, 2021, 10:48 am to 11:05 am)

[Questions and answers:]

Q.

Regarding SBI Holdings, Inc., the company announced yesterday that its subsidiary, SBI Social Lending Co., Ltd., will withdraw from the social lending business as it committed a violation by soliciting investments based on incorrect information. SBI explains that it will fix the damage to investors through compensation for loss. What do you think of the administrative disposition on this case? I think that SBI Holdings is also liable as the parent company in terms of corporate governance. What do you think of the liability of a parent company?

A.

It was announced yesterday that SBI Social Lending Co., Ltd., a subsidiary of SBI Holdings, Inc., will close its business voluntarily on condition of redemption of all existing funds and will withdraw from the social lending business through so-called business discontinuance. Of course, I know that, but I will refrain from making any comments on individual cases. However, generally speaking, in such cases, a relevant financial institution should first consider the circumstances, seriousness, maliciousness or other factors of the case and formulate and implement recurrence prevention measures, and administrative authorities are to scrutinize the status of the financial institution's efforts and take required measures. Additionally, in general terms, the Financial Instruments and Exchange Act, apart from the Banking Act, prohibits compensation for loss. It would be illegal if an investor who has suffered a loss through an investment based on his/her own decision, is compensated for the loss. However, when a service provider has committed a violation and caused a loss, and an application is filed while reporting the case as an accident involving securities, Financial Services Agency checks the circumstances and the loss may be compensated. This is true, but anyhow, appropriate responses are required. Regarding your other question, it is a pity that SBI Social Lending committed an act in violation of its obligation to protect investors, but you are asking about the parent company. I would like to refrain from making any comments on individual cases or on the liability of a parent company. It is SBI Social Lending, not SBI Holdings or its parent company, that the FSA supervises under the Financial Instruments and Exchange Act. Parent companies are governed by the Banking Act, not by the Financial Instruments and Exchange Act. Therefore, we may need to separately discuss legal adjustments.