(July 9): An MUFG Bank employee is suspected of leaking tender offer details and other non-public information about client companies to family members, Japanese media reported, weeks after the banking group was reprimanded for breaching firewalls.
Relatives may have traded stocks using the information, potentially earning several million yen, according to the reports.
An MUFG Bank spokesman confirmed that it was being investigated by Japan’s Securities and Exchange Surveillance Commission (SESC), but declined to comment further as the probe is ongoing. The bank, which is a unit of Mitsubishi UFJ Financial Group Inc, will fully cooperate with the investigation, the spokesman said.
The SESC conducted a search of the home of the employee, who has denied wrongdoing, the Yomiuri reported earlier. The employee was working at Mitsubishi UFJ Morgan Stanley Securities Co (MUMSS) on assignment at the time, the Asahi newspaper reported. An MUMSS spokesperson declined to comment.
The report follows Japan’s financial regulator penalising the banking unit and two brokerage joint ventures late last month for violating client confidentiality rules. That scandal has shaken confidence in the country’s largest banking group, causing some clients to take bond underwriting business elsewhere.
If not for the recent firewall breach troubles, “then this most recent scandal could have been perhaps ascribed to a single employee’s behaviour rather than some problem at the firm itself,” said Michael Makdad, an analyst at Morningstar Inc. “But in the context of the recent sanctions, I don’t think another problem, regardless of how minor, can be quietly swept away.”
The banking group will need to carefully review all of its compliance procedures across the bank and its various securities units, he said.
MUFG’s shares fell 1.4% on Tuesday in Tokyo while the Topix stock gauge rose about 1%.
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