By YUKI KUBOTA/ Staff Writer
June 15, 2024 at 16:52 JST
The head office of MUFG Bank in Tokyo’s Chiyoda Ward on June 12 (Kyosuke Yamamoto)
Japan’s securities watchdog called for the banking and securities units of the Mitsubishi UFJ Financial Group (MUFG) to be slapped with penalties for sharing client information without authorization.
The Securities and Exchange Surveillance Commission (SESC) made the recommendation June 14 to the Financial Services Agency.
It said the parties disclosed information about clients regarding corporate acquisitions and other matters within the group.
The SESC said top-level officials of the group companies were involved in some instances.
The FSA will consider issuing a business improvement order, as well as other administrative measures, by the end of June.
The recommendations target MUFG Bank, Mitsubishi UFJ Morgan Stanley Securities Co. and Morgan Stanley MUFG Securities Co.
According to the SESC, officials of the MUFG Bank breached issues of confidentiality by passing on non-public information to the two securities firms about nine or possibly more client companies on at least 10 occasions from 2021 to 2023.
The two securities firms used the information to solicit the client companies to trade with them.
The SESC said this was a clear violation of the Financial Instruments and Exchange Law, which restricts information-sharing between banks and securities firms.
In one case, a client company expressly asked the MUFG Bank on repeated occasions not to divulge information about its stock offering to the bank’s affiliated securities firms.
Even so, an executive managing director conveyed the information to the vice president of Mitsubishi UFJ Morgan Stanley Securities.
The securities firm then approached the bank’s client in an attempt to obtain its underwriting business.
Kanetsugu Mike, the bank’s president at the time and now MUFG chairman, must have been aware that information was being shared inappropriately but failed to take any action, the SESC said.
The SESC also said that the MUFG Bank actively solicited securities underwriting, which is not permitted for banks, from 2019 to 2023.
On at least 28 occasions, the bank repeatedly solicited its corporate clients to place their business with the bank’s affiliated securities firms, the SESC said.
Between 2018 and 2023, it said a bank employee made around 5,000 stock trades in an account in his spouse’s name based on information about companies he had obtained during the course of his work. Some of the transactions were widely disseminated among the group, even to employees outside of the loop.
The SESC was scathing in its criticism of the management of each firm for not establishing in-house systems to prevent improper conduct.
“We sincerely apologize for any inconvenience or concern this may have caused to those involved,” the MUFG said in a statement.
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