Also, the NYSE said, Daiwa's stock loan desk didn't document compliance with the stock locate requirements.
That helped triple the earnings of Nomura Holdings and Daiwa Securities Group Inc.
WSJ: Asian Brokers Benefit From Rising Stock-Trading Volumes
Daiwa and Standard Life are the other two that have cut back on American equities.
"Investors were burned when Digitel was listed, " says Conrad Andres, vice-president for research of DBP Daiwa Securities.
The average recommended allocation has now slipped four points below the market weighting, with Daiwa the biggest seller.
Mr Iguchi, who worked for Daiwa Bank's New York branch, managed to disguise his spiralling losses for 11 years.
"It is a potential way to drive data traffic up, " said Michael Kovacocy, analyst with Daiwa Institute of Research.
The Nikkei article cites calculations by Daiwa Research Institute of household disposable income.
FORBES: Whither Japan Stocks: Stable Staples; Losing Luxuries
Another Japanese firm, Daiwa Securities, has also said that its in-house investigation discovered some employees may have leaked insider information.
"The more pragmatic approach from regulators is warranted, " said Michael Symonds, credit analyst for financials at Daiwa Capital Markets Europe.
Only Daiwa and Standard Life are overweight in yen bonds, and even Daiwa has cut their share by a quarter.
"BT is the stand-out performer today, " said Michael Kovacocy, a European telecoms analyst at the Daiwa Institute of Research in London.
Shares in other big and deeply troubled banks such as Nippon Credit Bank, Long-Term Credit Bank and Daiwa Bank, fell as much.
Such investors rely on pushy salesmen from Japanese securities firms, especially from the big four Nomura, Nikko, Daiwa and Yamaichi which lead-manage most bonds.
Just a day after Nomura's top executives resigned, Daiwa Securities also said its in-house investigation discovered some employees may have leaked insider information.
"Lenovo's going to definitely survive and do well in the long run, " said Joseph Ho, an analyst at Daiwa Securities in Hong Kong.
If the government chooses to convert, it will hold more than 50% of the shares of Daiwa Bank, Mitsui Trust and Chuo Trust.
Nomura reported its biggest gain in quarterly earnings in seven years last week, while Daiwa posted its best quarterly profit also in seven years.
WSJ: Asian Brokers Benefit From Rising Stock-Trading Volumes
Japan's Daiwa has slashed its recommended holding back from a staggering 70% in October, when it was worried about inflation, to a still-overweight 60%.
Of these, two international banks Yasuda Trust and Daiwa would have reported capital-adequacy ratios of less than 4%, a trigger under the new legislation for instant nationalisation.
Toyota and Daiwa Securities have already announced that they will grant stock options to employees, although there are still question marks over their tax treatment.
Daiwa Securities Group led big brokerages with a 4.1% advance.
Deutsche Telekom would be selling at the bottom if it were to do a deal with Vodafone now, said telecoms analyst Michael Kovacocy of Daiwa Institute of Research, Europe.
An MBA from the Chinese University of Hong Kong, he worked for the fund management arms of Hongkong Bank and Japanese securities giant Daiwa before joining Thornton in 1994.
"The bottom line was that today's number is pretty dire, and a sharp wake-up call for anyone who had already been dreaming of recovery, " said Colin Ellis at Daiwa Securities.
Yet such initiative would have come to nothing if Daiwa had not allowed Mr Iguchi to run his own back office, the bit of a bank that handles the paperwork.
Last August, gumshoes at Japan's central bank discovered that, despite Daiwa's woes, the New York branches of several other Japanese banks were still failing to separate record-keeping from trading operations.
"By any standard, China's GDP growth is still among the highest in the world, but stock valuations are among the cheapest in the region, " said Mingchun Sun, Asia economist for Daiwa Securities.
"The price of the yuan appreciation so far has been just too moderate and the trade surplus is related to structural problems, " said Xiao Minjie, an economist with Daiwa Institute of Research.
People will queue for hours to eat at Sushi Dai and Daiwa Sushi in the famous Tsujiki Market or flock to the Takashimaya depachika (food hall) for the latest French pastry.
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