Yahoo Finance Japan Regulator Poised to Penalize MUFG Units for Client Breach
(Bloomberg) -- Japan’s regulator plans to penalize a Mitsubishi UFJ Financial Group Inc. unit and two joint ventures as early as Monday for breaching client confidentiality rules, according to people with knowledge of the matter.
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The Financial Services Agency is expected to issue business improvement orders on MUFG Bank Ltd., Morgan Stanley MUFG Securities Co. and Mitsubishi UFJ Morgan Stanley Securities Co., the people said, asking not to be identified as the information isn’t public. The action follows a recommendation by Japan’s securities watchdog earlier this month.
Spokespeople for MUFG and Morgan Stanley MUFG Securities declined to comment. FSA officials said they could not comment. The timeline for the punishment was first reported by Kyodo News.
Commercial and investment banking arms of the same financial group are forbidden in Japan from sharing client data, in part to keep lenders from abusing their bargaining positions.
The Securities and Exchange Surveillance Commission this month said the firms exchanged information at least 26 times in order to win business. The market watchdog had also found other improper conducts, including cases in which MUFG Bank tried to win underwriting businesses for the brokerage unit.
The banking industry has long lobbied for this rule to be relaxed, arguing it would better serve clients’ interests if banks and their group brokerages can offer products and services together. Defenders of the rule say there is strong concern that banks could forcefully win businesses from borrowing clients by taking advantage of their bargaining position as lenders.
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