- SRM received a business improvement order from the Financial Services Agency.
- The order relates to asset management issues with SC Realty Private REIT, Inc.
- The issue involves real estate appraisal and valuation for a property acquired in FY2020.
- Sumitomo Corporation is analyzing root causes and formulating prevention measures.
Administrative Action
Sumisho Realty Management Corporation (SRM) has received a business improvement order from the Financial Services Agency under Article 51 of the Financial Instruments and Exchange Act. This action is due to compliance issues related to the asset management of SC Realty Private REIT, Inc.
Compliance and Internal Control
SRM is tasked with clarifying its management stance on compliance with laws and regulations. The company is required to establish a responsible system for compliance and internal control, and to review its business operation methods to meet these objectives.
Root Cause Analysis
Sumitomo Corporation is conducting a thorough analysis of the incident's root causes, including employee conduct and the influence exerted on SRM as a property seller. External legal counsel is assisting in this process.
Preventive Measures
Based on the findings, comprehensive recurrence-prevention measures are being formulated. These include reviewing the process for appointing SRM directors and management personnel, and strengthening SRM's compliance and internal control systems.
Financial Impact
The impact on Sumitomo Corporation Group's consolidated financial results is expected to be limited. Any material developments requiring disclosure will be promptly made public.
