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Mitsubishi (MUFG) Units Penalized for Client Data Breach in Japan
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Mitsubishi UFJ Financial Group, Inc.’s (MUFG - Free Report) banking and securities units have been penalized by Japan’s financial regulator for breaching the regulations governing client confidentiality. MUFG Bank Ltd., Morgan Stanley MUFG Securities Co. and Mitsubishi UFJ Morgan Stanley Securities Co. units are directed by the Financial Services Agency (“FSA”) to reinforce its compliance measures, per Reuters.
This order came to light following an investigation that identified several breaches of "firewall" regulations.
Further, FSA ordered MUFG and its units to provide reports detailing the reasons behind the breach, along with strategic measures to prevent it from repeating in the future by July 24.
Earlier this month, the Securities and Exchange Surveillance Commission identified that the client's confidential data had been exchanged 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.
In addition, MUFG Bank also provided preferred lending rates to clients engaged in business with the two securities brokerages.
According to Reuters reports, several clients of MUFG have already shifted their bond underwriting business as a result of this regulatory action.
Per FSA’s executive, although the group did not misuse its superior bargaining position, the sharing of customer information without the client’s consent was a “big Problem.” MUFG is responsible for the entire organization and is now taking action to strengthen its system.
Japan's "firewall" regulations forbid banks and securities companies in the same group from exchanging customer data without the customer's consent. Per Reuters reporting, MUFG has accepted these penalties and will submit the business improvement report to FSA in the said time.
Over the past six months, shares of MUFG have gained 13.2% on the NYSE compared with the industry’s 3.9% growth.
In May, Citigroup Inc. (C - Free Report) announced that it had been fined $78.4 million by a pair of British regulators due to the bank’s deficiencies in the systems and controls. These flaws led a trader to make an inputting error that caused a flash crash in May 2022.
The penalty amount for C comprised £27.8 million from the Financial Conduct Authority and £33.9 million from the Bank of England’s Prudential Regulation Authority.
JPMorgan (JPM - Free Report) is expected to pay $100 million to the U.S. Commodity Futures Trading Commission (“CFTC”) to settle claims related to trade reporting lapses. The news was reported by Reuters, citing a source with direct knowledge of the matter.
Per the source, JPM has also agreed to admit as part of the deal that it broke the agency’s rules.
While the admission has not been reported previously, it would benefit the CFTC, which has been trying to pester firms to assume more accountability for their wrongdoing.
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Mitsubishi (MUFG) Units Penalized for Client Data Breach in Japan
Mitsubishi UFJ Financial Group, Inc.’s (MUFG - Free Report) banking and securities units have been penalized by Japan’s financial regulator for breaching the regulations governing client confidentiality. MUFG Bank Ltd., Morgan Stanley MUFG Securities Co. and Mitsubishi UFJ Morgan Stanley Securities Co. units are directed by the Financial Services Agency (“FSA”) to reinforce its compliance measures, per Reuters.
This order came to light following an investigation that identified several breaches of "firewall" regulations.
Further, FSA ordered MUFG and its units to provide reports detailing the reasons behind the breach, along with strategic measures to prevent it from repeating in the future by July 24.
Earlier this month, the Securities and Exchange Surveillance Commission identified that the client's confidential data had been exchanged 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.
In addition, MUFG Bank also provided preferred lending rates to clients engaged in business with the two securities brokerages.
According to Reuters reports, several clients of MUFG have already shifted their bond underwriting business as a result of this regulatory action.
Per FSA’s executive, although the group did not misuse its superior bargaining position, the sharing of customer information without the client’s consent was a “big Problem.” MUFG is responsible for the entire organization and is now taking action to strengthen its system.
Japan's "firewall" regulations forbid banks and securities companies in the same group from exchanging customer data without the customer's consent. Per Reuters reporting, MUFG has accepted these penalties and will submit the business improvement report to FSA in the said time.
Over the past six months, shares of MUFG have gained 13.2% on the NYSE compared with the industry’s 3.9% growth.
Image Source: Zacks Investment Research
Currently, MUFG carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Legal Issues Faced by Other Firms
In May, Citigroup Inc. (C - Free Report) announced that it had been fined $78.4 million by a pair of British regulators due to the bank’s deficiencies in the systems and controls. These flaws led a trader to make an inputting error that caused a flash crash in May 2022.
The penalty amount for C comprised £27.8 million from the Financial Conduct Authority and £33.9 million from the Bank of England’s Prudential Regulation Authority.
JPMorgan (JPM - Free Report) is expected to pay $100 million to the U.S. Commodity Futures Trading Commission (“CFTC”) to settle claims related to trade reporting lapses. The news was reported by Reuters, citing a source with direct knowledge of the matter.
Per the source, JPM has also agreed to admit as part of the deal that it broke the agency’s rules.
While the admission has not been reported previously, it would benefit the CFTC, which has been trying to pester firms to assume more accountability for their wrongdoing.