Nomura, Japan’s largest investment bank by revenues, said employees were the source of non-public information used by fund managers in three insider trading cases that have come to light this year. These were the new share issues of Tokyo Electric Power, Inpex and Mizuho, for which Nomura acted as underwriter.

Market participants have long complained that non-public information is leaked to specific investors ahead of new share issues, allowing them to profit from the difference. Japan’s regulators and politicians have raised concerns that allegations of widespread insider trading have damaged the reputation of the Tokyo market and discouraged individual investors.

Nomura says lax internal controls and an excessive pursuit of profits partly led to staff leaking insider information. It stated that it would halve top executives’ pay for several months, fire those responsible and suspend certain businesses.

Kenichi Watanabe, chief executive, will take a 50 per cent pay cut for six months, while Takumi Shibata, chief operating officer, will take the same cut for five months starting from tomorrow. Mr Watanabe’s pay for the year ending March was 128 million yen.