Mitsubishi UFJ Financial Group, Inc. (MUFG)
MUFG Bank, Ltd. (MUFG Bank)
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (MUMSS)

Regarding Document Submissions Under Administrative
Actions by the Financial Services Agency
Tokyo July 19, 2024 --- On June 24, Japan’s Financial Services Agency (“FSA”)
issued business improvement orders to MUFG Bank and MUMSS under Article 51,
paragraph 2 and Article 51 of the Financial Instruments and Exchange Act, and request
for reporting to MUFG and MUFG Bank under Article 52, paragraph 31-1 and Article
24, paragraph 1, of the Banking Act.
Today, MUFG, MUFG Bank, and MUMSS submitted documents including business
improvement plans to the FSA based on its business improvement orders and request
for reporting.
We sincerely apologize again for the inconvenience and concern this is causing ourcustomers and other stakeholders.
We take these incidents very seriously, and will enact more effective policies to prevent
recurrence, steadily implementing these business improvement plans across theGroup to restore trust by realizing customer-centric sales activities that leverage theGroup’s collective strengths.
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Regarding root causes of the incidents and measures for improvement, etc., reported
in the documents submitted

1. The incidents and their root causes
MUFG has been advancing collaboration between its Group companies in order toleverage the Group’s collective strengths to meet customers’ diverse needs. In thisadministrative actions, inappropriate activities, primarily in collaboration between
MUFG Bank and MUMSS (“bank-securities collaboration;” also includes
collaboration between MUMSS and Morgan Stanley MUFG Securities Co., Ltd.) toadvance business were identified, including improper sharing of customer
information between bank and securities, inadequate arrangements for managing
corporate information (including trading by a former MUFG Bank employee solely inpursuit of their speculative profit), and solicitation/negotiations related to equity andbond underwriting, which are securities services that banks are not permitted toengage in. Having analyzed the causes of these incidents, we believe their root
causes to be as follows.
(1) Overall issue
There were procedures/rules and certain internal control frameworks in place
while proactively advancing bank-securities collaboration. But considering thebalance between messages promoting leveraging MUFG’s collective strengths
to realize customer-centric sales activities through bank-securities
collaboration, there was insufficient penetration of correct understanding andconsciousness for complying with laws, regulations, etc., in such collaboration.
(2) Issues in sales divisions
There was insufficient development of risk ownership by sales divisions amid
the growth of bank-securities collaborative business.
(3) Issues in risk management divisions
Internal control frameworks, which should be continuously reviewed in light ofoperational realities, were not sufficiently expanded, and clarification ofoperational processes and procedures/rules matching the reality of banksecurities collaboration did not progress. Furthermore, enhancement of theoperating model to appropriately recognize risk with an understanding of theoperational situation of sales divisions, and expansion of monitoring
frameworks by risk management divisions (including risk management
functions within sales divisions) were insufficient.

2(4) Issues in management
Management did not properly recognize risks around a possible imbalance
between the messaging of advancing bank-securities collaboration andnotifying/emphasizing relevant procedures/rules within sales divisions, andwere not able to take appropriate action on the issues above.
2. Measures for improvement to prevent recurrence
Based on the root causes of the incidents identified in 1. above, we have formulated
the following improvement measures to prevent recurrence of such incidents.
Specifically, via the following five improvement measures (“Revise/emphasize
procedures/rules based on specific examples,” “Enhance training more in line withpractice,” “Review performance evaluations and reemphasize the objective of groupprofitability management,” “Enhance monitoring framework at sales/riskmanagement divisions,” and “Enhance management framework”) and improvement
measures as the holding company, we will strengthen our management framework,
compliance framework related to bank-securities collaboration, and internal control
frameworks including our customer information management framework. Some ofthese measures have already been implemented.
We will continue and strengthen the improvement measures that have been
implemented since the incidents occurred and steadily implement new improvement
measures to strengthen our framework and regain the trust of our customers andother stakeholders.
(1) Revise/emphasize procedures/rules based on specific examples
In addition to reinforcing basic procedures/rules that must be complied within thebank-securities collaborative business in line with the 2022 revision of the FSASupervisory Guideline, we will clarify/emphasize the following procedures/rules in
response to the incidents identified.
① Clarify responses to requests for partial restrictions on comprehensive consent
agreements for information sharing between bank-securities
Clarify rules for responding to requests for partial restrictions on
information sharing between bank-securities, made either verbally orthrough individual agreements, while maintaining blanket consent
agreements for information sharing between bank-securities

Implement centralized strict controls by risk management divisions
regarding the above-mentioned requests

Implement monitoring by risk management divisions on the status ofimplementation of partial restrictions on information sharing② Establish guidelines regarding the scope of internal sharing of corporate3

informationEmphasize the perspective of the need-to-know principle in deciding what
information shall be shared, even internally③ Clarify and reemphasize operational rules regarding information sharing basedon consent agreements

Reemphasize the purposes for which information can be shared as
stipulated in consent agreements

Clarify operating rules for information sharing in line with the objectives
specified in consent agreements④ Clarify procedures/rules related to the Banking Act and Financial Instruments
and Exchange Act (“financial law”) in a manner consistent with practice

Clarify procedures/rules for more accurate understanding of financial law
in a manner consistent with practice⑤ Enhance integrated management of corporate information
Establish an integrated bank-securities management framework forcorporate information, whereas it is currently being managed
independently, and realize consistent management and monitoring⑥ Seamless management of consent agreements


Establish a unified management framework of consent agreements
managed in a cross-entity database, enabling timely sharing of informationon the granting/withdrawal of consent agreements(2) Enhance training more in line with practice
In addition to performing training to disseminate the Code of Conduct and to
notify/emphasize laws and regulations related to bank-securities collaborative
business, enhance training in a more practical manner by including sharing specificcase studies to address the incidents identified.
① Enhance various training programsTraining on handling of corporate information/consent agreement content(reemphasize the content/scope of information that can be shared
between bank-securities based on consent agreements, and that
corporate information should be shared to the minimum extent necessary)

Training on personal account dealing by executives and employees(reemphasize personal account dealing procedures/rules for executives
and employees, and raise awareness by showing videos based on specificexamples of improper investing)Training on financial law (clarify and reemphasize the line between
permissible/impermissible conduct in bank-securities collaboration)4

Study sessions on performance evaluations and group profitabilitymanagement (penetration of the original purpose of performance
evaluation/group profitability management in an easy-to-understand form,
and notify/emphasize to the front line based on an understanding of theposition of group profitability management in communication withcustomers)

Discussion at the branch/division level based on specific examples oncompany-wide compliance training

Expand training for executives (described in (5))② (MUFG Bank) Strengthen advisory functions for sales divisions
Establish a new advisory function on what is permissible/impermissible
under financial law in the practice of bank-securities collaboration,
exceptional handling of information sharing consent agreements, etc.

Monitor customer negotiation records and provide guidance andreminders based on trends identified in those records, as well as
training/study sessions③ Confirm penetration
Continuously confirm the status of penetration by means of post-training
verification tests, questionnaires, on-site interviews, etc.

(3) Review performance evaluations and reemphasize the objective of groupprofitability management
Group collaboration, including bank-securities collaboration, is intended to meet thediverse needs of customers and realize customer-centric sales activities thatleverage MUFG’s comprehensive strengths, and performance evaluation/groupprofitability management are only a measure of the results. In order to ensure thatbank-securities collaboration is carried out in line with the original objectives, we will
review the processes and procedures/rules related to performance evaluations andgroup profitability management and reemphasize key points.
① Revise performance evaluations (rules for double-counting of profit between
bank-securities)
Exclude prior coordination of needs, etc., from the requirements fordouble-counting profit in evaluating the performance of bank-securities(preventing inappropriate coordination of information solely for thepurpose of double-counting profit)② Reemphasize the purpose of and key points of group profitability management

Reemphasize the purpose of group profitability management (a tool tomeasure whether customer-centric sales activities are being realized)

Reemphasize key points when using group profitability management (an5

internal tool to measure whether customer-centric Group-based sales
activities are being realized, not a tool for communication with customers)③ Raise the weight of compliance items in organizational evaluations
Enhance the existing organizational evaluation system by raising theweight of compliance risk items in organizational evaluations

(MUFG Bank) Clarify the process for accurately capturing acts inimical torisk ownership in sales divisions and disqualifying them from performance
evaluations when identified(MUFG Bank) Make it mandatory to include firewall regulations, corporate
information management, other business regulations, etc., in sales
divisions’ risk ownership management policies(4) Enhance monitoring framework at sales/risk management divisions
We have been working to enhance monitoring of customer negotiation records
related to bank-securities collaborative products and have begun using AI to monitor
internal and external communications. Based on the incidents identified, we will
work to expand the coverage of products/projects and media, as well as tostrengthen the monitoring framework for the Group as a whole.
① Expand scope of monitoring

Expand scope of monitoring to all stages from project generation to project
closingExpand and periodically review products in scope of monitoringExpand target media for AI-based communication monitoring (customer
negotiation records, emails, call recordings) through bank-securities
collaboration.

② Enhance monitoring framework
Enhance integrated management of holding company/bank/securities risk
management divisions and clarify monitoring control towerRealize prompt monitoring by establishing a framework for simultaneousbank-securities monitoringPrioritize allocation of additional resources to strengthen monitoring
framework

(MUMSS) Enhance unified monitoring framework with Morgan Stanley
MUFG Securities(5) Enhance management framework
In response to the occurrence of the incidents identified, Crisis Control
Headquarters headed by the President & CEOs of MUFG/MUFG Bank/MUMSS

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were established, and under the leadership of the management team, remedial
measures were formulated based on an analysis of the root causes. Management
is committed to steadily implementing and monitoring the progress of the remedialmeasures. In order to spread awareness of compliance with laws, regulations, etc.,
based on correct understandings, the management team will clearly communicate
to executives and employees, and will work to enhance our management framework
while striving to understand the actual situation through dialogue with those working
at the front line. Since the involvement of executives in some of the incidents wererecognized, we will also significantly strengthen our response towards executive
officers.
① Commitment by management

Steady implementation/monitoring by management of the remedial
measures formulatedCommunicate messages from top management regarding recognition ofcompliance risk, future actions related to this matter, etc.

Enhance two-way communication between management and front line
employees, and enhance understanding of the actual situation at the frontline by the top management of business groups and units② Enhance training for executive officers, etc.
Conduct training on firewall regulations/financial law when executiveofficers are appointed

When executive officers are appointed, they will promise to comply withlaws and regulations and to accept punishment for violations (retroactivelyfrom existing executive officers as well)

Direct guidance by top management to executive officers in charge ofsales (to executive officers appointed in the future as well)

Establish/enhance training programs for executive officers (penetration ofcompliance awareness based on correct understandings of laws andregulations via inviting outside experts as lecturers and utilizing methods
such as discussions, role-playing, and comprehension tests)③ Enhance internal control framework in accordance with business risk
Prioritize allocation of additional resources to personnel, systems, etc., toenhance internal control framework in accordance with business risk
(review/enhance organizational structure, advisory functions, andmonitoring framework)④ Strengthen penalties for legal violations
Enhance penalties for legal violations by executives/employees⑤ Expand the purview of the Compliance Committee7In addition to evaluating compliance risk/deliberating on complianceprograms in each risk area, enhance risk verification in the axis ofimportant measures of sales divisions/deepen deliberation on internal
control framework for business risk

⑥ Verification by internal audit
Internal audit divisions will verify the appropriateness of improvement
measures and status of their operation/retention(6) Improvement measures as the holding company
MUFG, from its position as the holding company that oversees/supervisescollaboration among Group subsidiaries, will enhance management and verify theconsistency and effectiveness of the management framework and improvement
measures of each Group company on a Group-wide basis, and will take the initiativein reviewing operations/processes across Group subsidiaries.
① Review procedures/rules on a Group-wide basis


Review procedures/rules of each Group company to ensure consistencyand validity on a Group-wide basis



Review procedures/rules related to operations/processes across Groupcompanies② Enhance unified training on a Group-wide basis
Confirm consistency and verify effectiveness on a Group-wide basis visa-vis enhancing training at each Group company (if necessary,create/provide unified training content)Caution and notify/emphasize through joint Group training (training for
newly appointed executive officers, senior management training, integrity
training, etc.)③ Readjust bank-securities collaboration-related incentives on a Group-widebasis
Confirmation/verification of
profitability management

performance

evaluation/overallGroup④ Enhance monitoring framework on a Group-wide basis
Enhance unified monitoring by risk management divisions of bank andsecurities

Enhance monitoring framework at sales/risk management divisions ofbank and securities⑤ Enhance management frameworks on a Group-wide basisMonitor the progress of improvement measures by the Group Crisis
Control Headquarters meeting headed by the President & Group CEO.

8


Clarify commitment to compliance risk management as a Group throughunified messaging by top management on a Group-wide basis
Confirm/verify the appropriateness of resource allocation at each Groupcompany
Deliberate on internal control framework for business risk of importantmeasures of business groups at the Group Compliance CommitteeVerify the effectiveness of improvement measures and the status ofimplementation/retention of measures through the above initiatives

3. Disciplinary Actions Against Executives
Regarding the problems with bank-securities collaboration at MUFG Bank andMUMSS, management of corporate information, and monitoring framework inrelation to these matters, we take our responsibility very seriously and will reduce
compensation of the following executives.
(1) MUFG
Member of the Board of Directors, Chairman
Kanetsugu Mike
30% of monthly compensation × 5 months
Member of the Board of Directors, President & CEO (Representative CorporateExecutive)
Hironori Kamezawa 30% of monthly compensation × 3 months(2) MUFG Bank
Chairman of the Board of Directors (Representative of the Board of Directors)
Naoki Hori
30% of monthly compensation × 2 months
President & CEO (Representative of the Board of Directors)
Junichi Hanzawa
30% of monthly compensation × 3 months(3) MUMSS
Deputy Chairman (Chairman (Representative of the Board of Directors) ofMitsubishi UFJ Securities Holdings)
Saburo Araki
30% of monthly compensation × 2 months
President & CEO (Representative of the Board of Directors)
Makoto Kobayashi 30% of monthly compensation × 3 months
In addition to the above, executives involved in this incident will be strictly disciplined
according to internal rules.
Furthermore, we have requested certain retired executives return the equivalentamounts of their compensation, and have received their consent.

9MUFG Bank former Member of the Board of Directors
Muneya Taniguchi 10% of monthly compensation × 3 months
MUFG Bank former Senior Managing Executive Officer
Taiju Hisai
30% of monthly compensation × 3 months
MUFG Bank former Managing Executive Officer
Hiroshi Takimoto
10% of monthly compensation × 3 months
Mitsubishi UFJ Morgan Stanley Securities former Deputy President(Representative of the Board of Directors)
Haruo Nakamura
30% of monthly compensation × 3 months- End About MUFG
Mitsubishi UFJ Financial Group, Inc. (MUFG) is one of the world’s leading financialgroups. Headquartered in Tokyo and with over 360 years of history, MUFG has a global
network with approximately 2,000 locations in more than 40 countries. The Group has
about 120,000 employees and offers services including commercial banking, trust
banking, securities, credit cards, consumer finance, asset management, and leasing.
The Group aims to “be the world’s most trusted financial group” through close
collaboration among our operating companies and flexibly respond to all of the financial
needs of our customers, serving society, and fostering shared and sustainable growth
for a better world. MUFG’s shares trade on the Tokyo, Nagoya, and New York stock
exchanges. For more information, visit https://www.mufg.jp/english.

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