Japan's banking regulators on Monday ordered Mitsubishi UFJ Financial Group's banking and securities divisions to improve compliance measures after the securities regulators found multiple violations of "firewall" regulations.
This sanction comes less than two years after the securities division of rival Sumitomo Mitsui Financial Group was indicted for market manipulation charges, during which it was ordered to cease illegal activities and improve compliance.
The Financial Services Agency, responsible for such penalties, instructed Mitsubishi UFJ to identify the causes of the violations and submit a business improvement plan to prevent recurrence.
In mid-June, the Securities and Exchange Surveillance Commission recommended penalties against Mitsubishi UFJ Bank and its two joint ventures with Morgan Stanley for unauthorized sharing of client information.
Investigations found that Mitsubishi UFJ Bank had shared confidential information at least 26 times with its two affiliated securities companies, Mitsubishi UFJ Morgan Stanley Securities and Morgan Stanley MUFG Securities.
Additionally, it was discovered that Mitsubishi UFJ Bank provided preferential loan rates to clients who had business dealings with these two securities companies.
Japan’s "firewall" regulations prohibit banks and securities companies within the same group from sharing client data without client consent.
Mitsubishi UFJ stated in a release that it fully accepts these penalties and plans to submit a business improvement plan to the Financial Services Agency.
