Appendix 4

Organization of the SESC

The SESC is within the Financial Services Agency (FSA), which is based on Article 54 of the Act for Establishment of the Cabinet Office and Article 6 of the Act for Establishment of the Financial Services Agency. The SESC consists of a chairman and two commissioners. They are appointed by the Prime Minister with the consent of both Houses and may use their authority independently. To ensure their independence, basically, both the chairman and the commissioners may not be dismissed during their tenure of 3 years. In Dec. 2013, Chairman Kenichi Sado and Commissioners Masayuki Yoshida and Mari Sono were appointed and started their new 3-year term (8th term).

The Executive Bureau, under the control of the SESC is composed of the following six divisions: the Coordination Division, the Market Surveillance Division, the Inspection Division, the Administrative Monetary Penalty Division, the Disclosure Statements Inspection Division, and the Investigation Division. In addition, the SESC has staff members at the Local Finance Bureaus mainly in charge of inspections of financial instruments business operators located in the regional area. In total, there are 739 staff members (of which 400 work for the head office) as of fiscal year 2013.

For the purpose of appropriate market surveillance, the SESC has been strengthening its framework of market surveillance by recruiting lawyers, certified public accountants, real-estate appraisers, etc.

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Note: In Jul. 2006, the SESC was transformed from two divisions (the Coordination and Inspection Division and the Investigation Division) and three offices (the Compliance Inspection Office, the Market Surveillance Office and the Office of Penalties Investigation and Disclosure Documents Examination under the Coordination and Inspection Division) into five divisions (the Coordination Division, the Market Surveillance Division, the Inspection Division, the Civil Penalties Investigation and Disclosure Documents Inspection Division, and the Investigation Division). Furthermore, in Jul. 2011, the Civil Penalties Investigation and Disclosure Documents Inspection Division was divided into two divisions (the Administrative Monetary Penalty Division and the Disclosure Statements Inspection Division), meaning that the SESC was transformed into six divisions. In Aug. 2011, the Office of Investigation for International Transactions and Related Issues was established within the Administrative Monetary Penalty Division, to investigate transactions, etc. conducted by persons in foreign countries.
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