In re Mizuho Securities USA LLC

  
 
UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 98081 / August 8, 2023 
 
ADMINISTRATIVE PROCEEDING 
File No.  3 - 21557 
 
 
In the Matter of 
 
Mizuho Securities USA LLC, 
 
Respondent. 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS, 
PURSUANT TO SECTIONS 15(b) AND 21C 
OF THE SECURITIES EXCHANGE ACT OF 
1934, MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER 
 
 
I. 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in 
the public interest that public administrative and cease-and-desist proceedings be, and hereby 
are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 
(“Exchange Act”) against Mizuho Securities USA LLC (“Respondent” or “Mizuho”). 
 
II. 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (“Offer”) that the Commission has determined to accept.  Respondent admits the 
facts set forth in Section III below, acknowledges  that its conduct violated the federal securities 
laws, admits the Commission’s jurisdiction over it and the subject matter of these proceedings, and 
consents  to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings 
Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, 
and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.   
 
III. 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that 
 
Summary 
1. The federal securities laws impose recordkeeping requirements on broker-dealers 
to ensure that they responsibly discharge their crucial role in our markets.  The Commission has 
 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding.  

2 
long said that compliance with these requirements is essential to investor protection and the 
Commission’s efforts to further its mandate of protecting investors, maintaining fair, orderly, and 
efficient markets, and facilitating capital formation. 
2. These proceedings arise out of the widespread and longstanding failure of Mizuho 
employees throughout the firm, including at senior levels, to adhere to certain of these essential 
requirements and the firm’s own policies.  Using their personal devices, these employees 
communicated both internally and externally by personal text messages, or other text messaging 
platforms such as WhatsApp about the business of the broker-dealer operated by Mizuho (“off-
channel communications”). 
3. From at least January 2019, Mizuho employees sent and received off-c hannel 
communications.  Respondent did not maintain or preserve the substantial majority of these 
written communications.  Respondent’s failure was firm-wide, and involved employees at all 
levels of authority.  As a result, Mizuho violated Section 17(a) of the Exchange Act and Rule 
17a-4(b)(4) thereunder. 
4. Mizuho’s supervisors, who were responsible for supervising junior employees, 
routinely engaged in off-channel communications using their personal devices.  In fact, heads of 
groups, managing directors across the firm, and senior supervisors responsible for supervising 
junior employees themselves failed to comply with Mizuho policies by communicating using 
non-firm approved methods on their personal devices about the firm’s broker-dealer business.  
5. Mizuho’s widespread failure to implement its policies and procedures that 
prohibit such communications led to its failure to reasonably supervise its employees within the 
meaning of Section 15(b)(4)(E) of the Exchange Act.  
6. Commission staff uncovered Mizuho’s misconduct after commencing a risk-based 
initiative to investigate the use of off-channel and unpreserved communications at broker-
dealers.  Mizuho has initiated a review of its recordkeeping failures related to its broker-dealer 
business and begun a program of remediation.  As set forth in the Undertakings below, Mizuho 
will retain an independent compliance consultant to review and assess Mizuho’s remedial steps 
relating to its recordkeeping practices, policies and procedures, related supervisory practices, and 
employment actions related to the firm’s broker-dealer business. 
Respondent 
7. Mizuho is a Delaware limited liability company registered with the Commission as 
a broker-dealer and headquartered in New York, N.Y.  It is an indirect wholly owned subsidiary of 
Mizuho Financial Group, a global financial services firm incorporated and domiciled in Japan. 
Recordkeeping Requirements under the Exchange Act 
8. Section 17(a)(1) of the Exchange Act authorizes the Commission to issue rules 
requiring broker-dealers to make and keep for prescribed periods, and furnish copies of, such 
records as necessary or appropriate in the public interest, for the protection of investors or 
otherwise in furtherance of the purposes of the Exchange Act. 

3 
9. The Commission adopted Rule 17a-4 pursuant to this authority.  Rule 17a-4 
specifies the manner and length of time that the records created in accordance with other 
Commission rules, and certain other records produced by broker-dealers, must be maintained and 
produced promptly to Commission representatives.  The rules adopted under Section 17(a)(1) of 
the Exchange Act, including Rule 17a-4(b)(4), require that broker-dealers preserve in an easily 
accessible place originals of all communications received and copies of all communications sent 
relating to the firm’s business as such.  These rules impose minimum recordkeeping 
requirements that are based on standards a prudent broker-dealer should follow in the normal 
course of business.  
10. The Commission previously has stated that these and other recordkeeping 
requirements “are an integral part of the investor protection function of the Commission, and 
other securities regulators, in that the preserved records are the primary means of monitoring 
compliance with applicable securities laws, including antifraud provisions and financial 
responsibility standards.”  Commission Guidance to Broker-Dealers on the Use of Electronic 
Storage Media under the Electronic Signatures in Global and National Commerce Act of 2000 
with Respect to Rule 17a-4(f), 17 C.F.R. Part 241, Exchange Act Rel. No. 44238 (May 1, 2001). 
Mizuho’s P
olicies and Procedures 
11. Mizuho maintained certain policies and procedures designed to ensure the 
retention of business-related records, including electronic communications, in compliance with 
the relevant recordkeeping provisions related to broker-dealers.   
12. Mizuho employees were advised that the use of unapproved electronic 
communications methods, including on their personal devices, was not permitted, and they 
should not use personal email, chats or text messaging applications to communicate about the 
firm’s broker-dealer business, or forward work-related communications to their personal devices.  
13. Messages sent through firm-approved communications methods were monitored, 
subject to review, and, when appropriate, archived.  Messages sent through unapproved 
communications methods, such as WhatsApp, iMessage, and other unapproved applications on 
personal devices, were not monitored, subject to review or archived. 
14. Mizuho’s policies were designed to address supervisors’ supervision of 
employees’ training in the firm’s communications policies and adherence to firm’s books and 
recordkeeping requirements related to the firm’s broker-dealer business.  Supervisory policies 
notified employees that electronic communications were subject to surveillance by Mizuho.   
15. Mizuho, however, failed to implement a system of follow-up and review to 
determine that supervisors were reasonably following Mizuho’s policies with respect to the 
retention of communications related to the firm’s broker-dealer business.  While permitting 
employees to use approved communications methods, including on personal phones, for business 
communications, Mizuho failed to implement sufficient monitoring to assure that its 
recordkeeping and communications policies were being followed.  

4 
Mizuho’s Recordkeeping Failures Across Its Brokerage Business 
16. In September 2021, the Commission staff commenced a risk-based initiative to 
investigate whether broker-dealers were properly retaining business-related messages sent and 
received on personal devices.  Mizuho cooperated with the investigation by voluntarily 
interviewing a sampling of senior and other broker-dealer personnel.  These personnel included 
senior leadership, group heads, and managing directors. 
17. The Commission staff’s investigation uncovered pervasive off-channel 
communications at all seniority levels of Mizuho’s broker-dealer.  The Mizuho investigation 
determined that almost all broker-dealer personnel sampled had engaged in at least some level of 
off-channel communications.  Overall, these personnel sent and received numerous off-channel 
communications, involving other Mizuho personnel, Mizuho’s broker-dealer customers, and 
other participants in the securities industry.  Within Mizuho, significant numbers of senior 
management, industry group heads, and managing directors participated in off-channel 
communications. 
18. From at least January 2019, Mizuho personnel sent and received off-channel 
messages that concerned the broker-dealers’ businesses, including discussions of customer 
meetings and communications about market color, analysis, activity trends or events. 
19. For example, during the relevant period, a managing director who was head of a 
trading desk exchanged text messages with almost ten other Mizuho employees, including four 
employees who reported to him, about the firm’s broker-dealer business.  The managing director 
also communicated with two market participants by WhatsApp message. 
20. Similarly, another managing director exchanged text messages with dozens of 
Mizuho employees—some of whom reported to him—in the United States and abroad.  During 
the relevant period, this Mizuho employee also had business communications by text or 
WhatsApp message with at least four customers or securities-market participants external to the 
Firm.  
21. In addition, a managing director who was head of a business group exchanged 
hundreds of text messages or WhatsApp messages with at least 24 Mizuho employees, including 
at least two he supervised.  The messages covered a variety of topics related to his work in the 
securities markets, including work on existing transactions and potential new transactions, and in 
at least four instances involved communications external to the Firm.  Until late in 2022, this 
managing director had a practice of deleting WhatsApp messages, so it is likely that some 
Mizuho business records held by this managing director no longer exist.  

5 
Mizuho’s Violations and Failure to Supervise 
22. As a result of the conduct described above, from at least January 2019 through the 
date of this Order, Respondent willfully
2
 violated Section 17(a) of the Exchange Act and Rule 
17a-4(b)(4) thereunder, which require broker-dealers to preserve for at least three years originals 
of all communications received and copies of all communications sent relating to its business as 
such.   
23. As a result of the conduct described above, Respondent failed reasonably to 
supervise its employees with a view to preventing or detecting certain of its employees’ aiding 
and abetting violations of Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder, 
within the meaning of Section 15(b)(4)(E) of the Exchange Act.  
Mizuho’s Remedial Efforts 
24. In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by Mizuho and cooperation afforded the Commission staff.  During the 
relevant period, Mizuho revised its policies and procedures and issued repeated reminders about its 
policies to broker-dealer staff.   
Undertakings 
25. Prior to this action, Mizuho enhanced its policies and procedures, increased 
training concerning the use of approved communications methods, including on personal devices, 
and began implementing significant changes to the technology available to employees.  In 
addition, Respondent has undertaken to: 
26. Independent Compliance Consultant. 
a.  Mizuho shall retain, within thirty (30) days of the entry of this Order, the 
services of an independent compliance consultant (“Compliance Consultant”) that is not 
unacceptable to the Commission staff.  The Compliance Consultant’s compensation and 
expenses shall be borne exclusively by Mizuho. 
 
b.  Mizuho will oversee the work of the Compliance Consultant. 
 
c.  Mizuho shall provide to the Commission staff, within sixty (60) days of the 
entry of this Order, a copy of the engagement letter detailing the Compliance 
Consultant’s responsibilities, which shall include a comprehensive compliance review as 
described below.  Mizuho shall require that, within ninety (90) days of the date of the 
engagement letter, the Compliance Consultant conduct: 
 
 
2
  “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act 
“‘means no more than that the person charged with the duty knows what he is doing.’”  
Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir 2000) (quoting Hughes v. SEC, 174 F.2d 969, 
977 (D.C. Cir. 1949)).   

6 
i.  A comprehensive review of Mizuho’s supervisory, compliance, and 
other policies and procedures designed to ensure that Mizuho’s electronic 
communications, including those found on personal electronic devices, including 
without limitation, cellular phones (“Personal Devices”), are preserved in 
accordance with the requirements of the federal securities laws. 
 
ii.  A comprehensive review of training conducted by Mizuho to ensure 
personnel are complying with the requirements regarding the preservation of 
electronic communications, including those found on Personal Devices, in 
accordance with the requirements of the federal securities laws, including by 
ensuring that Mizuho personnel certify in writing on a quarterly basis that they are 
complying with preservation requirements.  
 
iii.  An assessment of the surveillance program measures implemented by 
Mizuho to ensure compliance, on an ongoing basis, with the requirements found 
in the federal securities laws to preserve electronic communications, including 
those found on Personal Devices. 
 
iv.  An assessment of the technological solutions that Mizuho has begun 
implementing to meet the record retention requirements of the federal securities 
laws, including an assessment of the likelihood that Mizuho personnel will use the 
technological solutions going forward and a review of the measures employed by 
Mizuho to track employee usage of new technological solutions.  
 
v.  An assessment of the measures used by Mizuho to prevent the use of 
unauthorized communications methods for business communications by 
employees.  This assessment should include, but not be limited to, a review of 
Mizuho’s policies and procedures to ascertain if they provide for any significant 
technology and/or behavioral restrictions that help prevent the risk of the use of 
unapproved communications methods on Personal Devices (e.g., trading floor 
restrictions).   
 
vi.  A review of Mizuho’s electronic communications surveillance routines 
to ensure that electronic communications through approved communications 
methods found on Personal Devices are incorporated into Mizuho’s overall 
communications surveillance program.   
 
vii.  A comprehensive review of the framework adopted by Mizuho to 
address instances of non-compliance by Mizuho employees with Mizuho’s 
policies and procedures concerning the use of Personal Devices to communicate 
about Mizuho business in the past.  This review shall include a survey of how 
Mizuho determined which employees failed to comply with Mizuho policies and 
procedures, the corrective action carried out, an evaluation of who violated 
policies and why, what penalties were imposed, and whether penalties were 
handed out consistently across business lines and seniority levels.   
 

7 
d.  Mizuho shall require that, within forty-five (45) days after completion of the 
review set forth in sub-paragraphs c.i. through c.vii. above, the Compliance Consultant 
shall submit a detailed written report of its findings to Mizuho and to the Commission 
staff (the “Report”).  Mizuho shall require that the Report include a description of the 
review performed, the names of the individuals who performed the review, the 
conclusions reached, the Compliance Consultant’s recommendations for changes in or 
improvements to Mizuho’s policies and procedures, and a summary of the plan for 
implementing the recommended changes in or improvements to Mizuho’s policies and 
procedures. 
 
e.  Mizuho shall adopt all recommendations contained in the Report within ninety 
(90) days of the date of the Report; provided, however, that within forty-five (45) days 
after the date of Report, Mizuho shall advise the Compliance Consultant and the 
Commission staff in writing of any recommendations that Mizuho considers to be unduly 
burdensome, impractical, or inappropriate.  With respect to any recommendation that 
Mizuho considers unduly burdensome, impractical, or inappropriate, Mizuho need not 
adopt such recommendation at that time, but shall propose in writing an alternative 
policy, procedure, or disclosure designed to achieve the same objective or purpose. 
 
f.  As to any recommendation concerning Mizuho’s policies or procedures on 
which Mizuho and the Compliance Consultant do not agree, Mizuho and the Compliance 
Consultant shall attempt in good faith to reach an agreement within sixty (60) days after 
the date of the Report.  Within fifteen (15) days after the conclusion of the discussion and 
evaluation by Mizuho and the Compliance Consultant, Mizuho shall require that the 
Compliance Consultant inform Mizuho and the Commission staff in writing of the 
Compliance Consultant’s final determination concerning any recommendation that 
Mizuho considers to be unduly burdensome, impractical, or inappropriate.  Mizuho shall 
abide by the determinations of the Compliance Consultant and, within sixty (60) days 
after final agreement between Mizuho and the Compliance Consultant or final 
determination by the Compliance Consultant, whichever occurs first, Mizuho shall adopt 
and implement all of the recommendations that the Compliance Consultant deems 
appropriate. 
 
g.  Mizuho shall cooperate fully with the Compliance Consultant and shall 
provide the Compliance Consultant with access to such of Mizuho’s files, books, records, 
and personnel as are reasonably requested by the Compliance Consultant for review. 
 
h. Mizuho shall not have the authority to terminate the Compliance Consultant or 
substitute another compliance consultant for the initial Compliance Consultant, without 
the prior written approval of the Commission staff.  Mizuho shall compensate the 
Compliance Consultant and persons engaged to assist the Compliance Consultant for 
services rendered under this Order at their reasonable and customary rates. 
i.  For the period of engagement and for a period of two years from completion of 
the engagement, Respondent shall not (i) retain the Compliance Consultant for any other 
professional services outside of the services described in this Order; (ii) enter into any 

8 
other professional relationship with the Compliance Consultant, including any 
employment, consultant, attorney-client, auditing or other professional relationship; or 
(iii) enter, without prior written consent of the Commission staff, into any such 
professional relationship with any of the Compliance Consultant’s present or former 
affiliates, employers, directors, officers, employees, or agents acting in their capacity as 
such.  
j.  The Report by the Compliance Consultant will likely include confidential 
financial, proprietary, competitive business or commercial information.  Public disclosure 
of the Report could discourage cooperation, impede pending or potential government 
investigations or undermine the objectives of the reporting requirement.    For these reasons, 
among others, the Report and the contents thereof are intended to remain and shall remain 
non-public, except (1) pursuant to court order, (2) as agreed to by the parties in writing, 
(3) to the extent that the Commission determines in its sole discretion that disclosure 
would be in furtherance of the Commission’s discharge of its duties and responsibilities, 
or (4) is otherwise required by law. 
 
27. One-Year Evaluation.  Mizuho shall require the Compliance Consultant to assess 
Mizuho’s program for the preservation, as required under the federal securities laws, of 
electronic communications, including those found on Personal Devices, commencing one year 
after submitting the report required by Paragraph  above.  Mizuho shall require this review to 
evaluate Mizuho’s progress in the areas described in Paragraph 26.c.i-vii above.  After this 
review, Mizuho shall require the Compliance Consultant to submit a report (the “One Year 
Report”) to Mizuho and the Commission staff and shall ensure that the One Year Report includes 
an updated assessment of Mizuho’s policies and procedures with regard to the preservation of 
electronic communications (including those found on Personal Devices), training, surveillance 
programs, and technological solutions implemented in the prior year period.  
28. R
eporting Discipline Imposed.  For two years following the entry of this Order, 
Mizuho shall notify the Commission staff as follows upon the imposition of any discipline 
imposed by Mizuho, including, but not limited to, written warnings, loss of any pay, bonus, or 
incentive compensation, or the termination of employment, with respect to any employee found to 
have violated Mizuho’s policies and procedures concerning the preservation of electronic 
communications, including those found on Personal Devices:  at least 48 hours before the filing of 
a Form U-5, or within ten (10) days of the imposition of other discipline.   
29. I
nternal Audit.  In addition to the Compliance Consultant’s review and issuance of 
the One Year Report, Mizuho will also have its Internal Audit function conduct a separate audit(s) 
to assess Mizuho’s progress in the areas described in Paragraph 26.c.i-vii above.  After completion 
of this audit(s), Mizuho shall ensure that Internal Audit submits a report to  Mizuho and to the 
Commission staff. 
30. R
ecordkeeping.  Mizuho shall preserve, for a period of not less than six (6) years 
from the end of the fiscal year last used, the first two (2) years in an easily accessible place, any 
record of compliance with these undertakings. 

9 
31. Deadlines.  For good cause shown, the Commission staff may extend any of the 
procedural dates relating to the undertakings.  Deadlines for procedural dates shall be counted in 
calendar days, except that if the last day falls on a weekend or federal holiday, the next business 
day shall be considered to be the last day. 
32. C
ertification.  Mizuho shall certify, in writing, compliance with the undertakings 
set forth above.  The certification shall identify the undertakings, provide written evidence of 
compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate 
compliance.  The Commission staff may make reasonable requests for further evidence of 
compliance, and Respondent agrees to provide such evidence.  The certification and supporting 
material be submitted to Alison R. Levine, Assistant Regional Director of the Enforcement 
Division, New York Regional Office, Securities and Exchange Commission, 100 Pearl Street, 
Suite 20-100, New York, NY, 10004-2616, or such other person as the Commission staff may 
request, with a copy to the Office of Chief Counsel of the Enforcement Division, no later than 
sixty (60) days from the date of the completion of the undertakings. 
IV. 
 In view of the foregoing, the Commission deems it appropriate and in the public interest 
to impose the sanctions agreed to in Respondent’s Offer. 
 
 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act, it is hereby 
ORDERED that: 
 
 A. Respondent cease and desist from committing or causing any violations and any 
future violations of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder. 
 
B. Respondent is censured.  
 
C. Respondent shall comply with the undertakings enumerated in paragraphs 25-32 
above. 
  
 D. Respondent shall, within 30 days of the entry of this Order, pay a civil money 
penalty in the amount of $25,000,000 to the Securities and Exchange Commission for transfer to 
the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If 
timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C.  § 3717.   
 
 Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, 
which will provide detailed ACH transfer/Fedwire instructions upon 
request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 

10 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
Mizuho as a Respondent in these proceedings, and the file number of these proceedings; a copy 
of the cover letter and check or money order must be sent to Thomas P. Smith, Jr., Associate 
Regional Director, Division of Enforcement, Securities and Exchange Commission, 100 Pearl 
Street, Suite 20-100, New York, New York 10004-2616.   
 
 E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 
be treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such 
a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 
granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount 
of the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 
deemed an additional civil penalty and shall not be deemed to change the amount of the civil 
penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 
means a private damages action brought against Respondent by or on behalf of one or more 
investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding. 
 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
       Secretary 

UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 98081 / August 8, 2023 
 
ADMINISTRATIVE PROCEEDING 
File No.  3 - 21557 
 
 
In the Matter of 
 

Mizuho Securities USA LLC, 
 
Respondent. 

ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS, 
PURSUANT TO SECTIONS 15(b) AND 21C 
OF THE SECURITIES EXCHANGE ACT OF 
1934, MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER 

 
 

I. 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in 
the public interest that public administrative and cease-and-desist proceedings be, and hereby 
are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 
(“Exchange Act”) against Mizuho Securities USA LLC (“Respondent” or “Mizuho”). 

 
II. 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (“Offer”) that the Commission has determined to accept.  Respondent admits the 
facts set forth in Section III below, acknowledges that its conduct violated the federal securities 
laws, admits the Commission’s jurisdiction over it and the subject matter of these proceedings, and 
consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings 
Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, 
and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.   
 

III. 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that 
 

Summary 

1. The federal securities laws impose recordkeeping requirements on broker-dealers 
to ensure that they responsibly discharge their crucial role in our markets.  The Commission has 

 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding.  



2 

long said that compliance with these requirements is essential to investor protection and the 
Commission’s efforts to further its mandate of protecting investors, maintaining fair, orderly, and 
efficient markets, and facilitating capital formation. 

2. These proceedings arise out of the widespread and longstanding failure of Mizuho 
employees throughout the firm, including at senior levels, to adhere to certain of these essential 
requirements and the firm’s own policies.  Using their personal devices, these employees 
communicated both internally and externally by personal text messages, or other text messaging 
platforms such as WhatsApp about the business of the broker-dealer operated by Mizuho (“off-
channel communications”). 

3. From at least January 2019, Mizuho employees sent and received off-channel 
communications.  Respondent did not maintain or preserve the substantial majority of these 
written communications.  Respondent’s failure was firm-wide, and involved employees at all 
levels of authority.  As a result, Mizuho violated Section 17(a) of the Exchange Act and Rule 
17a-4(b)(4) thereunder. 

4. Mizuho’s supervisors, who were responsible for supervising junior employees, 
routinely engaged in off-channel communications using their personal devices.  In fact, heads of 
groups, managing directors across the firm, and senior supervisors responsible for supervising 
junior employees themselves failed to comply with Mizuho policies by communicating using 
non-firm approved methods on their personal devices about the firm’s broker-dealer business.  

5. Mizuho’s widespread failure to implement its policies and procedures that 
prohibit such communications led to its failure to reasonably supervise its employees within the 
meaning of Section 15(b)(4)(E) of the Exchange Act.  

6. Commission staff uncovered Mizuho’s misconduct after commencing a risk-based 
initiative to investigate the use of off-channel and unpreserved communications at broker-
dealers.  Mizuho has initiated a review of its recordkeeping failures related to its broker-dealer 
business and begun a program of remediation.  As set forth in the Undertakings below, Mizuho 
will retain an independent compliance consultant to review and assess Mizuho’s remedial steps 
relating to its recordkeeping practices, policies and procedures, related supervisory practices, and 
employment actions related to the firm’s broker-dealer business. 

Respondent 

7. Mizuho is a Delaware limited liability company registered with the Commission as 
a broker-dealer and headquartered in New York, N.Y.  It is an indirect wholly owned subsidiary of 
Mizuho Financial Group, a global financial services firm incorporated and domiciled in Japan. 

Recordkeeping Requirements under the Exchange Act 

8. Section 17(a)(1) of the Exchange Act authorizes the Commission to issue rules 
requiring broker-dealers to make and keep for prescribed periods, and furnish copies of, such 
records as necessary or appropriate in the public interest, for the protection of investors or 
otherwise in furtherance of the purposes of the Exchange Act. 



3 

9. The Commission adopted Rule 17a-4 pursuant to this authority.  Rule 17a-4 
specifies the manner and length of time that the records created in accordance with other 
Commission rules, and certain other records produced by broker-dealers, must be maintained and 
produced promptly to Commission representatives.  The rules adopted under Section 17(a)(1) of 
the Exchange Act, including Rule 17a-4(b)(4), require that broker-dealers preserve in an easily 
accessible place originals of all communications received and copies of all communications sent 
relating to the firm’s business as such.  These rules impose minimum recordkeeping 
requirements that are based on standards a prudent broker-dealer should follow in the normal 
course of business.  

10. The Commission previously has stated that these and other recordkeeping 
requirements “are an integral part of the investor protection function of the Commission, and 
other securities regulators, in that the preserved records are the primary means of monitoring 
compliance with applicable securities laws, including antifraud provisions and financial 
responsibility standards.”  Commission Guidance to Broker-Dealers on the Use of Electronic 
Storage Media under the Electronic Signatures in Global and National Commerce Act of 2000 
with Respect to Rule 17a-4(f), 17 C.F.R. Part 241, Exchange Act Rel. No. 44238 (May 1, 2001). 

Mizuho’s Policies and Procedures 

11. Mizuho maintained certain policies and procedures designed to ensure the 
retention of business-related records, including electronic communications, in compliance with 
the relevant recordkeeping provisions related to broker-dealers.   

12. Mizuho employees were advised that the use of unapproved electronic 
communications methods, including on their personal devices, was not permitted, and they 
should not use personal email, chats or text messaging applications to communicate about the 
firm’s broker-dealer business, or forward work-related communications to their personal devices.  

13. Messages sent through firm-approved communications methods were monitored, 
subject to review, and, when appropriate, archived.  Messages sent through unapproved 
communications methods, such as WhatsApp, iMessage, and other unapproved applications on 
personal devices, were not monitored, subject to review or archived. 

14. Mizuho’s policies were designed to address supervisors’ supervision of 
employees’ training in the firm’s communications policies and adherence to firm’s books and 
recordkeeping requirements related to the firm’s broker-dealer business.  Supervisory policies 
notified employees that electronic communications were subject to surveillance by Mizuho.   

15. Mizuho, however, failed to implement a system of follow-up and review to 
determine that supervisors were reasonably following Mizuho’s policies with respect to the 
retention of communications related to the firm’s broker-dealer business.  While permitting 
employees to use approved communications methods, including on personal phones, for business 
communications, Mizuho failed to implement sufficient monitoring to assure that its 
recordkeeping and communications policies were being followed.  



4 

Mizuho’s Recordkeeping Failures Across Its Brokerage Business 

16. In September 2021, the Commission staff commenced a risk-based initiative to 
investigate whether broker-dealers were properly retaining business-related messages sent and 
received on personal devices.  Mizuho cooperated with the investigation by voluntarily 
interviewing a sampling of senior and other broker-dealer personnel.  These personnel included 
senior leadership, group heads, and managing directors. 

17. The Commission staff’s investigation uncovered pervasive off-channel 
communications at all seniority levels of Mizuho’s broker-dealer.  The Mizuho investigation 
determined that almost all broker-dealer personnel sampled had engaged in at least some level of 
off-channel communications.  Overall, these personnel sent and received numerous off-channel 
communications, involving other Mizuho personnel, Mizuho’s broker-dealer customers, and 
other participants in the securities industry.  Within Mizuho, significant numbers of senior 
management, industry group heads, and managing directors participated in off-channel 
communications. 

18. From at least January 2019, Mizuho personnel sent and received off-channel 
messages that concerned the broker-dealers’ businesses, including discussions of customer 
meetings and communications about market color, analysis, activity trends or events. 

19. For example, during the relevant period, a managing director who was head of a 
trading desk exchanged text messages with almost ten other Mizuho employees, including four 
employees who reported to him, about the firm’s broker-dealer business.  The managing director 
also communicated with two market participants by WhatsApp message. 

20. Similarly, another managing director exchanged text messages with dozens of 
Mizuho employees—some of whom reported to him—in the United States and abroad.  During 
the relevant period, this Mizuho employee also had business communications by text or 
WhatsApp message with at least four customers or securities-market participants external to the 
Firm.  

21. In addition, a managing director who was head of a business group exchanged 
hundreds of text messages or WhatsApp messages with at least 24 Mizuho employees, including 
at least two he supervised.  The messages covered a variety of topics related to his work in the 
securities markets, including work on existing transactions and potential new transactions, and in 
at least four instances involved communications external to the Firm.  Until late in 2022, this 
managing director had a practice of deleting WhatsApp messages, so it is likely that some 
Mizuho business records held by this managing director no longer exist.  



5 

Mizuho’s Violations and Failure to Supervise 

22. As a result of the conduct described above, from at least January 2019 through the 
date of this Order, Respondent willfully2 violated Section 17(a) of the Exchange Act and Rule 
17a-4(b)(4) thereunder, which require broker-dealers to preserve for at least three years originals 
of all communications received and copies of all communications sent relating to its business as 
such.   

23. As a result of the conduct described above, Respondent failed reasonably to 
supervise its employees with a view to preventing or detecting certain of its employees’ aiding 
and abetting violations of Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder, 
within the meaning of Section 15(b)(4)(E) of the Exchange Act.  

Mizuho’s Remedial Efforts 

24. In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by Mizuho and cooperation afforded the Commission staff.  During the 
relevant period, Mizuho revised its policies and procedures and issued repeated reminders about its 
policies to broker-dealer staff.   

Undertakings 

25. Prior to this action, Mizuho enhanced its policies and procedures, increased 
training concerning the use of approved communications methods, including on personal devices, 
and began implementing significant changes to the technology available to employees.  In 
addition, Respondent has undertaken to: 

26. Independent Compliance Consultant. 

a.  Mizuho shall retain, within thirty (30) days of the entry of this Order, the 
services of an independent compliance consultant (“Compliance Consultant”) that is not 
unacceptable to the Commission staff.  The Compliance Consultant’s compensation and 
expenses shall be borne exclusively by Mizuho. 

 
b.  Mizuho will oversee the work of the Compliance Consultant. 
 
c.  Mizuho shall provide to the Commission staff, within sixty (60) days of the 

entry of this Order, a copy of the engagement letter detailing the Compliance 
Consultant’s responsibilities, which shall include a comprehensive compliance review as 
described below.  Mizuho shall require that, within ninety (90) days of the date of the 
engagement letter, the Compliance Consultant conduct: 

 

 
2  “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act 
“‘means no more than that the person charged with the duty knows what he is doing.’”  
Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir 2000) (quoting Hughes v. SEC, 174 F.2d 969, 
977 (D.C. Cir. 1949)).   



6 

i.  A comprehensive review of Mizuho’s supervisory, compliance, and 
other policies and procedures designed to ensure that Mizuho’s electronic 
communications, including those found on personal electronic devices, including 
without limitation, cellular phones (“Personal Devices”), are preserved in 
accordance with the requirements of the federal securities laws. 

 
ii.  A comprehensive review of training conducted by Mizuho to ensure 

personnel are complying with the requirements regarding the preservation of 
electronic communications, including those found on Personal Devices, in 
accordance with the requirements of the federal securities laws, including by 
ensuring that Mizuho personnel certify in writing on a quarterly basis that they are 
complying with preservation requirements.  

 
iii.  An assessment of the surveillance program measures implemented by 

Mizuho to ensure compliance, on an ongoing basis, with the requirements found 
in the federal securities laws to preserve electronic communications, including 
those found on Personal Devices. 

 
iv.  An assessment of the technological solutions that Mizuho has begun 

implementing to meet the record retention requirements of the federal securities 
laws, including an assessment of the likelihood that Mizuho personnel will use the 
technological solutions going forward and a review of the measures employed by 
Mizuho to track employee usage of new technological solutions.  

 
v.  An assessment of the measures used by Mizuho to prevent the use of 

unauthorized communications methods for business communications by 
employees.  This assessment should include, but not be limited to, a review of 
Mizuho’s policies and procedures to ascertain if they provide for any significant 
technology and/or behavioral restrictions that help prevent the risk of the use of 
unapproved communications methods on Personal Devices (e.g., trading floor 
restrictions).   

 
vi.  A review of Mizuho’s electronic communications surveillance routines 

to ensure that electronic communications through approved communications 
methods found on Personal Devices are incorporated into Mizuho’s overall 
communications surveillance program.   

 
vii.  A comprehensive review of the framework adopted by Mizuho to 

address instances of non-compliance by Mizuho employees with Mizuho’s 
policies and procedures concerning the use of Personal Devices to communicate 
about Mizuho business in the past.  This review shall include a survey of how 
Mizuho determined which employees failed to comply with Mizuho policies and 
procedures, the corrective action carried out, an evaluation of who violated 
policies and why, what penalties were imposed, and whether penalties were 
handed out consistently across business lines and seniority levels.   

 



7 

d.  Mizuho shall require that, within forty-five (45) days after completion of the 
review set forth in sub-paragraphs c.i. through c.vii. above, the Compliance Consultant 
shall submit a detailed written report of its findings to Mizuho and to the Commission 
staff (the “Report”).  Mizuho shall require that the Report include a description of the 
review performed, the names of the individuals who performed the review, the 
conclusions reached, the Compliance Consultant’s recommendations for changes in or 
improvements to Mizuho’s policies and procedures, and a summary of the plan for 
implementing the recommended changes in or improvements to Mizuho’s policies and 
procedures. 

 
e.  Mizuho shall adopt all recommendations contained in the Report within ninety 

(90) days of the date of the Report; provided, however, that within forty-five (45) days 
after the date of Report, Mizuho shall advise the Compliance Consultant and the 
Commission staff in writing of any recommendations that Mizuho considers to be unduly 
burdensome, impractical, or inappropriate.  With respect to any recommendation that 
Mizuho considers unduly burdensome, impractical, or inappropriate, Mizuho need not 
adopt such recommendation at that time, but shall propose in writing an alternative 
policy, procedure, or disclosure designed to achieve the same objective or purpose. 

 
f.  As to any recommendation concerning Mizuho’s policies or procedures on 

which Mizuho and the Compliance Consultant do not agree, Mizuho and the Compliance 
Consultant shall attempt in good faith to reach an agreement within sixty (60) days after 
the date of the Report.  Within fifteen (15) days after the conclusion of the discussion and 
evaluation by Mizuho and the Compliance Consultant, Mizuho shall require that the 
Compliance Consultant inform Mizuho and the Commission staff in writing of the 
Compliance Consultant’s final determination concerning any recommendation that 
Mizuho considers to be unduly burdensome, impractical, or inappropriate.  Mizuho shall 
abide by the determinations of the Compliance Consultant and, within sixty (60) days 
after final agreement between Mizuho and the Compliance Consultant or final 
determination by the Compliance Consultant, whichever occurs first, Mizuho shall adopt 
and implement all of the recommendations that the Compliance Consultant deems 
appropriate. 

 
g.  Mizuho shall cooperate fully with the Compliance Consultant and shall 

provide the Compliance Consultant with access to such of Mizuho’s files, books, records, 
and personnel as are reasonably requested by the Compliance Consultant for review. 

 
h. Mizuho shall not have the authority to terminate the Compliance Consultant or 

substitute another compliance consultant for the initial Compliance Consultant, without 
the prior written approval of the Commission staff.  Mizuho shall compensate the 
Compliance Consultant and persons engaged to assist the Compliance Consultant for 
services rendered under this Order at their reasonable and customary rates. 

i.  For the period of engagement and for a period of two years from completion of 
the engagement, Respondent shall not (i) retain the Compliance Consultant for any other 
professional services outside of the services described in this Order; (ii) enter into any 



8 

other professional relationship with the Compliance Consultant, including any 
employment, consultant, attorney-client, auditing or other professional relationship; or 
(iii) enter, without prior written consent of the Commission staff, into any such 
professional relationship with any of the Compliance Consultant’s present or former 
affiliates, employers, directors, officers, employees, or agents acting in their capacity as 
such.  

j.  The Report by the Compliance Consultant will likely include confidential 
financial, proprietary, competitive business or commercial information.  Public disclosure 
of the Report could discourage cooperation, impede pending or potential government 
investigations or undermine the objectives of the reporting requirement.  For these reasons, 
among others, the Report and the contents thereof are intended to remain and shall remain 
non-public, except (1) pursuant to court order, (2) as agreed to by the parties in writing, 
(3) to the extent that the Commission determines in its sole discretion that disclosure 
would be in furtherance of the Commission’s discharge of its duties and responsibilities, 
or (4) is otherwise required by law. 

 
27. One-Year Evaluation.  Mizuho shall require the Compliance Consultant to assess 

Mizuho’s program for the preservation, as required under the federal securities laws, of 
electronic communications, including those found on Personal Devices, commencing one year 
after submitting the report required by Paragraph  above.  Mizuho shall require this review to 
evaluate Mizuho’s progress in the areas described in Paragraph 26.c.i-vii above.  After this 
review, Mizuho shall require the Compliance Consultant to submit a report (the “One Year 
Report”) to Mizuho and the Commission staff and shall ensure that the One Year Report includes 
an updated assessment of Mizuho’s policies and procedures with regard to the preservation of 
electronic communications (including those found on Personal Devices), training, surveillance 
programs, and technological solutions implemented in the prior year period.  

28. Reporting Discipline Imposed.  For two years following the entry of this Order, 
Mizuho shall notify the Commission staff as follows upon the imposition of any discipline 
imposed by Mizuho, including, but not limited to, written warnings, loss of any pay, bonus, or 
incentive compensation, or the termination of employment, with respect to any employee found to 
have violated Mizuho’s policies and procedures concerning the preservation of electronic 
communications, including those found on Personal Devices:  at least 48 hours before the filing of 
a Form U-5, or within ten (10) days of the imposition of other discipline.   

29. Internal Audit.  In addition to the Compliance Consultant’s review and issuance of 
the One Year Report, Mizuho will also have its Internal Audit function conduct a separate audit(s) 
to assess Mizuho’s progress in the areas described in Paragraph 26.c.i-vii above.  After completion 
of this audit(s), Mizuho shall ensure that Internal Audit submits a report to Mizuho and to the 
Commission staff. 

30. Recordkeeping.  Mizuho shall preserve, for a period of not less than six (6) years 
from the end of the fiscal year last used, the first two (2) years in an easily accessible place, any 
record of compliance with these undertakings. 



9 

31. Deadlines.  For good cause shown, the Commission staff may extend any of the 
procedural dates relating to the undertakings.  Deadlines for procedural dates shall be counted in 
calendar days, except that if the last day falls on a weekend or federal holiday, the next business 
day shall be considered to be the last day. 

32. Certification.  Mizuho shall certify, in writing, compliance with the undertakings 
set forth above.  The certification shall identify the undertakings, provide written evidence of 
compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate 
compliance.  The Commission staff may make reasonable requests for further evidence of 
compliance, and Respondent agrees to provide such evidence.  The certification and supporting 
material be submitted to Alison R. Levine, Assistant Regional Director of the Enforcement 
Division, New York Regional Office, Securities and Exchange Commission, 100 Pearl Street, 
Suite 20-100, New York, NY, 10004-2616, or such other person as the Commission staff may 
request, with a copy to the Office of Chief Counsel of the Enforcement Division, no later than 
sixty (60) days from the date of the completion of the undertakings. 

IV. 

 In view of the foregoing, the Commission deems it appropriate and in the public interest 
to impose the sanctions agreed to in Respondent’s Offer. 
 
 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act, it is hereby 
ORDERED that: 
 
 A. Respondent cease and desist from committing or causing any violations and any 
future violations of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder. 
 

B. Respondent is censured.  
 
C. Respondent shall comply with the undertakings enumerated in paragraphs 25-32 

above. 
  
 D. Respondent shall, within 30 days of the entry of this Order, pay a civil money 
penalty in the amount of $25,000,000 to the Securities and Exchange Commission for transfer to 
the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If 
timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C.  § 3717.   
 
 Payment must be made in one of the following ways:   
 

(1) Respondent may transmit payment electronically to the Commission, 
which will provide detailed ACH transfer/Fedwire instructions upon 
request;  

 
(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 



10 

(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  

 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 

 
Payments by check or money order must be accompanied by a cover letter identifying 

Mizuho as a Respondent in these proceedings, and the file number of these proceedings; a copy 
of the cover letter and check or money order must be sent to Thomas P. Smith, Jr., Associate 
Regional Director, Division of Enforcement, Securities and Exchange Commission, 100 Pearl 
Street, Suite 20-100, New York, New York 10004-2616.   
 
 E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 
be treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such 
a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 
granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount 
of the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 
deemed an additional civil penalty and shall not be deemed to change the amount of the civil 
penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 
means a private damages action brought against Respondent by or on behalf of one or more 
investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding. 
 
 
 By the Commission. 
 
 
 

Vanessa A. Countryman 
       Secretary 


	UNITED STATES OF AMERICA
	In the Matter of
	Mizuho Securities USA LLC,
	Respondent.
	I.
	II.
	III.
	Summary
	Respondent
	Recordkeeping Requirements under the Exchange Act
	Mizuho’s Policies and Procedures
	Mizuho’s Recordkeeping Failures Across Its Brokerage Business
	Mizuho’s Violations and Failure to Supervise
	Mizuho’s Remedial Efforts
	Undertakings

	IV.