Nikko Cordial sues three former employees over scandal

24 April 2007

Citigroup-takeover-target Nikko Cordial is taking legal action against three former employees who embroiled the brokerage in an accounting scandal.

The Japanese brokerage is suing former president Junichi Arimura, former chairman of the firm's brokerage private equity division Hurifumi Hirano and former chief financial officer Hajime Yamamoto for $28.47 million in compensation over their alleged role in the accounting irregularities which lead to their resignation last year.

Nikko meanwhile, was subject to punitive measures including a fine of $4.24 million from the Financial Services Agency, but was not de-listed from the Tokyo Stock Exchange after it found that the fraud had not been on a systematic basis.

News of that Nikko is to seek damages from its clients comes reports indicate that Citigroup's bid to take over the company may be jeopardised as shareholders continue to reject the US bank's offer of $13.4 billion as undervaluing the brokerage.

Having already increased its initial offer price by 26 per cent in March, Citigroup has told the 28 per cent of shareholders who are holding out for more money that it has ruled out making an increased bid.

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