(Yicai Global) Dec. 15 -- Japan’s biggest brokerage and investment bank Nomura Holdings’ joint venture securities firm in China is reeling from recent allegations that it leaked confidential data about a third party without performing the necessary internal checks, the JV said.

The reputation of Nomura Orient International Securities, China’s first foreign-controlled brokerage, has been severely damaged, it said on Dec. 13. The Shanghai-based company has reported the incident to the authorities and reserves the right to take legal action against those responsible, it added.

The JV, which first opened its doors last December, is accused of ordering an intern to forward the minutes of a conference call that discussed sensitive information about chip giant Semiconductor Manufacturing International Corp to some of its clients without undergoing a proper review, a person familiar with the matter revealed on Weibo on Dec. 13.

Upon learning of the matter, Shanghai-based SMI threatened to sue, concerned that the unauthorized sharing of such information among buy-oriented institutions could affect its share price. The JV immediately blamed the intern, who was fired and will likely never be able to work for a foreign-funded financial institution again.

The JV's internal governance is a mess, the insider said. A number of executives from its compliance department, which ensures the business adheres to external rules and internal controls, have already quit because they were unhappy with how it is run.

Nomura Orient values the construction of compliance culture, it said. The JV neither denied nor confirmed the accusations.

Tokyo-based Nomura holds a 51 percent stake in the JV, while Shanghai-based state-owned enterprises Orient International and Huangpu Investment Holding own 24.9 percent and 24.1 percent, respectively.

Editors: Dou Shicong, Kim Taylor