SMBC Nikko, the brokerage unit of Japanese lender Sumitomo Mitsui Banking Corp, has apologised to clients after it was found to be divulging insider information.

Japan's second biggest bank issued a mea culpa on Friday, following an order to improve by the Financial Services Agency.

Japan’s watchdog told the unit that it must submit a report by 1 May showing who is responsible for leaked information ahead of a share sale.

The Securities and Exchange Surveillance Commission recommended to the FSA that the firm should be punished after it found sales staff disclosing insider information to clients about an upcoming equity offering.

“Today, SMBC Nikko was issued a business improvement order by the FSA based on...findings of deficient internal control systems with respect to undisclosed corporate information and inappropriate solicitation activities by SMBC Nikko,“ said the firm in a statement published on Friday.

"We would like to apologise with our deepest sincerity for the inconvenience and concern this has caused to all of our customers and stakeholders," said SMBC Nikko. 

“We will respond to the administrative action against SMBC Nikko by the FSA with profound gravity by supervising SMBC Nikko’s compliance measures to prevent reoccurrence and by taking appropriate efforts to further strengthen our group wide compliance and control system.”