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Mitsubishi (MUFG) U.S. Arm Gets OCC's Cease-and-Desist Order

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Mitsubishi UFJ Financial Group’s MUFG U.S. banking unit, MUFG Union Bank NA, has been slapped with a cease-and-desist order by the Office of the Comptroller of the Currency (“OCC”) over its unsound technological practices.

The regulator detected that the bank engaged in "unsafe or unsound practices" linked with technology and operational risk management. According to the order, the bank was also in non-conformity with certain security guidelines. Nonetheless, Mitsubishi UFG is in progress with the "corrective action" and has "committed resources to remediate the deficiencies".

The bank’s board of directors will appoint a compliance committee by Oct 20, comprising at least three members. The majority of these will be directors who are not employees or officers of the bank or any of its subsidiaries or affiliates.


Additionally, within 90 days of the effective date of the order, Mitsubishi UFG must develop an acceptable, written action plan to include the details related to the corrective actions.

The order further stated that by Jan 30, 2022, and thereafter, within a month, following the end of each quarter, the compliance committee should submit a written progress report to the board of directors. It will include details about the description of as well as specific remedial actions required to achieve compliance with each article of the order.

The report would also bear the results and status of the reformatory actions. Upon receipt of each written progress report, the board must forward a copy of the same along with any additional comments to the examiner-in-charge within 10 days of the first board meeting subsequent to the board of director’s in-taking of such report.

Further, by Feb 14, 2022, and thereafter, within 45 days after the end of each quarter, Mitsubishi UFG should draft, and submit to the board, a written action plan progress report. This must include the details pertaining to the description of the outstanding reformatory actions needed to attain compliance, the specific actions already undertaken, and the results and status of the same.

Our Take

Mitsubishi UFJ’s robust capital position keeps it well poised to undertake expansion strategies. Also, its intention to enter profitable business operations bodes well for the long term. However, the net interest income continues to remain under pressure due to the unfavorable interest rates.

The stock has lost 4.5% over the past six months, against 1% growth recorded by the industry it belongs to.

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Zacks Investment Research

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Currently, Mitsubishi UFG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Several finance companies continue to encounter legal hassles and are charged with huge sums of money for business malpractices. Even after facing a penalty and an enforcement action entailing business restrictions earlier this month, Well Fargo & Company’s WFC legal hassles are far from over. This is because U.S. Senator Elizabeth Warren has addressed a letter to the Federal Reserve, urging the central bank to revoke the bank’s license as a financial holding company.

Credit Acceptance Corporation CACC had also announced about the settlement of a lawsuit with the Massachusetts Attorney General and agreed to pay $27.2 million. In August 2020, AG Maura Healey filed a lawsuit in Suffolk County Superior Court, claiming that the company violated state consumer protection, and debt collection laws and regulations.

Charles Schwab SCHW had been slapped with a class-action lawsuit over violations of its fiduciary duty by placing its own interest before the protection of its clients through the bank’s robo-adviser Schwab Intelligent Portfolios’ (SIP) cash sweep program. The case, filed in the U.S. District Court in Northern California, also accused the company of breach of contract and the violation of state laws.

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Mitsubishi UFJ Financial Group, Inc. (MUFG) : Free Stock Analysis Report

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