On June 24, the Financial Services Agency issued a business improvement order under the Financial Instruments and Exchange Act to MUFG Bank, Ltd., Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., and Morgan Stanley MUFG Securities Co., Ltd., and a report submission order under the Banking Act to Mitsubishi UFJ Financial Group, Inc., the holding company. The problem was the so-called “firewall regulations (FW regulations).” The companies were accused of sharing non-public information about corporate clients held by MUFG Bank among the group and using their dominant position as a bank to solicit securities trading and the like.

The FW regulations have been eased due to industry restructuring, especially among banks, and the globalization of finance. In 2022, for listed companies, the sharing of customer information within the same financial group was permitted unless the company refused. Discussions by experts are currently in the direction of “from listed companies to unlisted companies, and eventually to small and medium-sized enterprises and individuals.” However, needless to say, confirmation of consent to information sharing, strict control of conflict-of-interest transactions, prevention of abuse of a dominant position, and enhancement of information security are necessary first and foremost.

MUFG is not the first megabank that violated FW regulations. In 2022, the investigation into the stock price manipulation of SMBC Nikko Securities Inc. revealed that non-public information about SMBC’s corporate clients was shared within the SMBC Group. While independent financial securities firms such as Nomura Holdings, Inc. are calling for more careful and secure information handling, the misconduct of the top two megabanks who had been leading the deregulation is truly a betrayal of trust in the “premise” of deregulation, and a regression in discussions will be inevitable.

In industries and societies, scandals regarding violations of rules and disregard for laws and regulations by those who have the broadest influence and the most vested interests, in other words, the greatest “power,” namely MUFG, Toyota, politicians, and government officials, never end. Furthermore, the number of people who repeat sophistry and do shockvertising or outrage marketing, saying that “It is no problem as long as it does not violate the law.”, is also increasing. I do not want to live in a society full of conceit and self-righteousness where “fairness” is disregarded. Adults in Japan need to get ahold of themselves!

This Week’s Focus, June 28, 2024

Takashi Mizukoshi, the President