Mitsubishi UFJ Financial Group units are facing potential penalties for sharing nonpublic information about client companies without their permission, according to people familiar with the matter.
The Securities and Exchange Surveillance Commission is considering recommending administrative action against MUFG Bank, Mitsubishi UFJ Morgan Stanley Securities and Morgan Stanley MUFG Securities, said the people, who asked not to be identified because the matter is confidential.
MUFG Bank and the securities firms exchanged information related to clients¡¯ mergers and acquisitions without their consent, in violation of Japan¡¯s financial instruments law, the people said.
The bank implied that it would offer preferential lending rates on the condition of doing business with the brokerages, the Nikkei newspaper reported earlier.
If the SESC makes the recommendation, the Financial Services Agency (FSA) will consider action such as a business improvement order by the end this month, according to the report.
In addition, MUFG Bank negotiated loans as well as an underwriting deal with an investment firm that operates real estate investment trusts, in breach of rules limiting commercial banks¡¯ ability to conduct securities business, the people said.
Finance Minister Shunichi Suzuki told a news conference Friday that he was unable to comment on individual cases, while adding that ¡°I believe the SESC will take firm action, and an announcement will be made in due course.¡±
A spokesperson for Mitsubishi UFJ Morgan Stanley Securities said the company hasn¡¯t received any recommendation from the SESC.
Morgan Stanley MUFG Securities said in a statement that it wasn¡¯t the source of media reports.
An MUFG Bank representative declined to comment.
Shares of MUFG, Japan¡¯s biggest banking group, fell as much as 2.8% on Friday.
It was the worst performer on the Topix Banks Index.
Japanese law prohibits the sharing of customer information between banks and securities firms without consent.
In 2022, regulators found firewall violations as part of a probe into market manipulation at Sumitomo Mitsui Financial Group¡¯s securities arm.
In that case, the FSA told Sumitomo Mitsui and its commercial banking arm to report on why the lender improperly shared clients¡¯ information with the brokerage subsidiary.
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