Yahoo Finance Mitsubishi (MUFG) Units Get Business Improvement Order by FSA
Mitsubishi UFJ Financial Group, Inc. MUFG provided an update regarding administrative action against MUFG Bank and Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (MUMSS) by Japan’s Financial Services Agency (FSA). The action was taken for breaching the regulations governing client confidentiality.
The FSA issued business improvement orders to MUFG Bank and MUMSS under the Financial Instruments and Exchange Act and orders to submit reports to MUFG and MUFG Bank under the Banking Act (Articles 52, paragraph 31-1 and 24, paragraph 1).
The FSA move came after the Securities and Exchange Surveillance Commission (SESC) recommended administrative action for sharing client confidential data on at least 26 occasions between MUFG Bank and one of its two securities firms — Mitsubishi UFJ Morgan Stanley Securities and Morgan Stanley MUFG Securities.
The FSA has penalized MUFG units on account of this client data breach.
MUFG management stated, “We sincerely apologize for the inconvenience and concern this is causing our customers and other stakeholders.”
To prevent a recurrence, MUFG, MUFG Bank and MUMSS will have to take this administrative action seriously. Accordingly, the three will have to fortify their frameworks and implement more sensible procedures for legal compliance, among other things, on the cooperative operation between banking and securities.
To thoroughly disseminate information internally as quickly as possible, the companies plan to use training and study sessions. In the medium- to long-term, they intend to strengthen monitoring systems, including system development. At the same time, they will formulate and disseminate procedures and rules suited to actual cases and conditions in the short term.
MUFG, MUFG Bank and MUMSS plan to submit business improvement strategies and reports related to this issue to the FSA based on these business improvement orders.
In light of these administrative proceedings, MUFG Bank will clarify where responsibility resides, including with management. Based on an examination of the underlying reasons for these accidents, it will swiftly create and progressively carry out an efficient company improvement plan.
The companies will reinforce internal control systems, including management systems, legal compliance systems related to banking-securities collaboration and customer information management systems.
To comply with Article 12 of the Banking Act's prohibition on engaging in other business and Article 12 paragraph 2-2 of the Banking Act's regulation of management of customer information, MUFG will verify the facts of the incidents at MUFG Bank, its subsidiary. As MUFG Bank's parent company, MUFG will then analyze the incidents' causes, including any underlying reasons and identify any issues based on these analyses.
In the past six months, shares of MUFG have appreciated 16.7% compared with the industry’s 2.9% growth.
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Currently, MUFG carries a Zacks Rank #4 (Sell).
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In the past six months, many other banks, including JPMorgan JPM and Barclays PLC BCS, have been subject to legal action.
In February 2024, a class-action lawsuit was filed by five customers against JPMorgan, claiming that the bank charged unconscionable fees for unintentionally depositing checks that bounced.
Per the suit filed in the White Plains, New York federal court, JPM charged customers up to $30 for a “deposited item return fee” after checks they tried to deposit bounced for no fault of theirs.
Likewise, as part of an industry-wide investigation into lenders’ exposure to the private equity industry, Britain’s Prudential Regulation Authority (PRA) asked Barclays to review its exposure to leveraged finance. The news was first reported by Bloomberg, citing a source familiar with the matter who asked not to be identified.
Per the people with knowledge of the matter, the PRA asked Barclays to commission a section 166 review of the business. Such a review forces a firm to bring in an outside expert to examine their practices and produce an independent report for the authorities, which can then prompt further action if necessary.
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