Business Improvement Order on MUFG Firms

The Financial Services Agency (MSA) took administrative action against three financial institutes in Mitsubishi UFJ Financial Group on their illegal treatment of information that they obtained from their customers through their business. FSA issued a business improvement order to each of them, requiring the plan for improvement. The illegal activities by the top runner of financial groups in Japan may slowdown the coordination between bank and securities firm.

The administrative action was taken to Mitsubishi Morgan Stanley Securities (MUFSS), Morgan Stanley MUFG Securities (MSMS) and MUFG Bank (MUBK). Securities and Exchange Surveillance Commission of MFA found in its inspection that the board members of MUFSS shared non-public information of their clients with MSMS and MUBK.

 

The Financial Instruments and Exchange Act (FIEA) prohibits providing or receiving non-public client information without consent of the client. Acknowledging that legal requirement, those board members provided or obtained the information at least thirteen times and shared it within MUFSS.

 

MFA raised two examples. One is that the vice-president of MUFSS obtained from MSBK information on when and how the stocks of company-A would be on sale and shared that information in MUFSS to achieve the status of leading manager for sales of the stocks. The company-A demanded MUBK not to share the information with other firms.

 

Another example is about acquisition of company. Company-B needed loan from MUBK for acquisition of another company. A worker for MUFSS obtained that information and shared it, knowing its illegality, within MUFSS and provided it to MSMS. MFA recognized that those activities would violate FIEA.

 

FSA ordered those three firms to clarify responsibilities of the managers, to develop an effective business improvement plan, and report the plan by late July. FSA indicated that internal system for compliance was not effectively established in those three firms, recommending fundamental improvement.

 

The government introduced “firewall regulation,” restricting information sharing between a bank and a securities firm, in 1993 when the banks allowed participating in securities business. It was aimed to prevent the major banks to take advantage of their dominant position in securities business. The illegal activities in MUFG group may affect the deregulation of the firewall, which major banks hope to promote.

 

It was later reported that FIEA had made an investigation in the headquarters of MUBK in May, with suspect of leaking non-public information of a client about its takeover bid. Heading to a new phase of financial business with interest, promoted by policy change of the Bank of Japan, banking business is facing competitive situation. Strict compliance would be required more than ever.

Comments

Post a Comment

Popular posts from this blog

Amendment of Local Autonomy Law

The House of Representatives started discussion on revision of the Local Autonomy Law, which would vest the national government a power to instruct local government in an emergency. It may change the relationship between the national and local government, which has been recognized as equal. The opposition parties oppose the amendment, arguing that it would give the national government an excessive power.   With the Meiji Restoration, the national government abolished the feudal system, introducing modern governance. However, its autonomy was not sufficient. The governor of each prefecture was appointed by the national government. The local governments subordinated to the national government. It was as late as 2000 when  the Comprehensive Decentralization Law  was enacted and the relationship between the national and local government was defined as equal.   The national government found inconvenience in the relationship between the national and local government, when ...
Read more

Request for Final Nuclear Disposal Site

Ministry of Economy, Trade and Industry requested Genkai Town, Saga, to accept “literature survey” for building a final disposal site for high-level radioactive waste. Genkai is going to answer within this month. If it accepts, it will be the third place to accept that survey, following two places in Hokkaido. Main reason to accept the survey is supposed to be subsidy from the national government.   Japan has no final disposal site. Among all 54 reactors in 17 nuclear power generation plant, 12 reactors of 6 plants are operating. The rest of them are not in operation, some of which are determined to be decommissioned. Used nuclear fuels are stocked in each plant, 　 or have sent to a reprocessing plant in Rokkasho, Aomori. There are two plans to stock nuclear wastes in the intermediate facility for disposal, one is already built and another is still in negotiation.   Nuclear Fuel Final Disposal Act in 2000 determines to bury nuclear waste in the underground. Literature survey, ...
Read more

Not A Royal Wedding

The bride called her husband an indispensable existence and their marriage was necessary choice to protect their mind. The groom insisted on his life as only once and his right to be with his loved one. Her father wanted his daughter’s marriage to be celebrated by the people. The people were not sure whether the family was happy as a whole. Is this the traditional Japanese social system that makes no one happy? Mako Komuro, as known as Princess Mako during her life in one of the royal family Akishino, held on Tuesday a press conference with her husband Kei Komuro, right after submitting marriage report to local government. It was something different from ordinary Q&A session, because Mako was afraid of her mental uneasiness brought by some questions not based on truth. So, the event was actually one-sided speech to the reporters. Mako emphasized that the Kei’s decision of studying abroad five years ago had not been his original idea, but a result of her request to establish an over...
Read more