MUFG Bank Employee Suspected of Leaking Takeover Bids; Relatives May Have Earned Millions of Yen in Trades

The Yomiuri Shimbun

16:00 JST, July 9, 2024

An employee of MUFG Bank is suspected of leaking takeover bids and other information about the bank’s client companies to relatives before the information was publicly announced, according to sources.

The relatives are suspected of having traded in shares of the client companies and earned millions of yen in profits. The Securities and Exchange Surveillance Commission (SESC) learned of the trades and searched the bank employee’s home on suspicion of their violating the Financial Instruments and Exchange Law.

The law prohibits someone who learns a “material fact” such as about a takeover bid or a merger or acquisition related to a listed company as part of business from trading shares before the fact is announced, or from leaking information to others for their benefit.

According to the sources, the bank employee the SESC is investigating worked at the bank’s head office and was once transferred to an affiliated securities firm.

The employee is suspected of having obtained undisclosed information such as about take-over bids by the bank’s client companies and its affiliated securities firm. The employee is suspected of having made leaks to relatives several times up to 2023.

The SESC searched the bank employee’s home around May, and also investigated the bank and the affiliated securities company.

The watchdog plans to interview the bank employee’s relatives on how they communicated with the employee and how the relatives traded their shares. The employee has reportedly denied to the watchdog any involvement in the alleged fraud.

“It’s true that an employee of MUFG Bank is being investigated by the watchdog. If the leak happened, it is truly regrettable. We intend to fully cooperate with the investigation,” said an official at Mitsubishi UFJ Financial Group Inc. (MUFG), the bank’s parent company.

The bank’s internal regulations prohibit its employees from leaking any undisclosed information about client companies to outside parties, including relatives.

The MUFG Bank was earlier learned to have shared customer information with affiliated securities firms without obtaining permission in violation of the so-called firewall regulation. Another bank employee was found to have used customer information to trade stocks for personal gain and was fired.

After receiving a notice from the SESC, the Financial Services Agency on June 24 issued a business improvement order to the bank and its two affiliated securities companies under the Banking Law.

The SESC is believed to have learned of the alleged leaks as part of its investigations, according to the sources.