December 18, 2024
TOKYO – There is concern within the financial industry that a spate of scandals involving financial institutions may lead to customers losing confidence in the sector.
The Financial Services Agency in June issued business improvement orders to MUFG Bank and two securities firms affiliated with Mitsubishi UFJ Financial Group Inc. for sharing non-public information about their clients without their consent.
It became known in July that the home of an employee of the bank, the bank and other related companies were searched by the Securities and Exchange Surveillance Commission on suspicion of violating the Financial Instruments and Exchange Law. The employee was suspected of having engaged in insider trading.
On Nov. 1, Sumitomo Mitsui Trust Bank said a former employee who was in a managerial position is suspected to have been involved in insider trading. The bank dismissed the individual. Kazuya Oyama, the bank’s president, apologized for the incident at a press conference.
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Nomura Securities Co. on Dec. 3 said President Kentaro Okuda and other executives will voluntarily return part of their monthly salaries because a former employee of the nation’s largest securities firm at its Hiroshima branch was indicted for attempted murder and robbery of a client of his and arson.
A bank official said customers had voiced concerns in the wake of the scandals.
“We must take the situation seriously as trust in the financial industry is at risk,” the official said. “The scandals may also put a damper on policies that encourage the management of personal assets.”
Shinji Hatta, a professor emeritus at Aoyama Gakuin University who is an expert on organizational governance, said the scandals reveal that organizational checking systems were poorly managed at the financial institutions.
“They are an issue that greatly overturns the common sense that banks’ operations are based on the trust of the customers,” Hatta said.
Regarding measures to prevent a recurrence, he said, “They should thoroughly review even the most basic measures, such as multilevel checks to prevent operational misconduct, from the perspective of protecting customers’ assets.”