2026-04-07 SEC Press pdf 351 KB 52,966 chars

In re MUFG Securities EMEA

Exhibit of SEC Announces Enforcement Results for Fiscal Year 2025

Enriched metadata

Scheme: broker-dealer-fraud (95%)
Outcome: settled
Civil penalty: $9,800,000
Victim loss: $2,000,000,000

Classified broker-dealer-fraud(confidence 95%). EDGAR detection: forms Form D· recall 29% / precision 9%. detection rule →

Extracted insights

Dollar amounts 3

$2.00B $2 billion ≥$1B
$268.00M $268 million $100M–$1B
$9.80M $9,800,000 $1M–$10M

Entities 5

company mufg securities emea plc
agency Securities and Exchange Commission
person substituted compliance conditions
person uk financial conduct authority
person uk prudential regulation authority

Triples 11

Securities and Exchange Commission instituted proceedings against MUFG Securities EMEA plc
MUFG Securities EMEA plc submitted Offer of Settlement
MUFG Securities EMEA plc is security-based swap dealer
MUFG Securities EMEA plc violated Exchange Act
MUFG Securities EMEA plc made untrue statements in registration application
MUFG Securities EMEA plc failed to satisfy substituted compliance conditions
MUFG Securities EMEA plc has total revenues of approximately $2 billion
MUFG Securities EMEA plc has net income of approximately $268 million
MUFG Securities EMEA plc is regulated by UK Prudential Regulation Authority
MUFG Securities EMEA plc is regulated by UK Financial Conduct Authority
MUFG Securities EMEA plc submitted notice of election to apply substituted compliance

PDF

In re MUFG Securities EMEA · Source

Text layers

Extracted body text (52,966c)

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 103646 / August 6, 2025

ADMINISTRATIVE PROCEEDING
File No. 3-22504

In the Matter of

MUFG Securities EMEA
plc

Respondent.

ORDER INSTITUTING
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS, PURSUANT TO
SECTIONS 15F(l)(2) AND 21C OF THE
SECURITIES EXCHANGE ACT OF 1934,
MAKING FINDINGS, AND IMPOSING
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the
public interest that public administrative and cease-and-desist proceedings be, and hereby are,
instituted pursuant to Sections 15F(l)(2) and 21C of the Securities Exchange Act of 1934
(“Exchange Act”) against MUFG Securities EMEA plc (“MUFG Securities EMEA” or
“Respondent”).

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose
of these proceedings and any other proceedings brought by or on behalf of the Commission, or to
which the Commission is a party, and without admitting or denying the findings herein, except as
to the Commission’s jurisdiction over it and the subject matter of these proceedings, which are
admitted, Respondent consents to the entry of this Order Instituting Administrative and Cease-and-
Desist Proceedings, Pursuant to Sections 15F(l)(2) and 21C of the Securities Exchange Act of
1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order
(“Order”), as set forth below.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds1 that

Summary

1. These proceedings arise out of violations of the Exchange Act by MUFG Securities
EMEA, a security-based swap dealer (“SBSD”) located in the United Kingdom and registered with
the Commission as an SBSD. When registering with the Commission, MUFG Securities EMEA
elected to comply with certain provisions of the Exchange Act and certain rules thereunder by
applying substituted compliance. For nearly three years after registration, however, while MUFG
Securities EMEA was dealing in security-based swaps in the U.S. security-based swap market, it
did not comply with certain requirements under the Exchange Act directly or through substituted
compliance. MUFG Securities EMEA repeatedly violated certain SBSD capital recordkeeping,
financial reporting, compliance, internal supervision and internal risk management requirements of
the Exchange Act and rules thereunder. Moreover, in its application for registration as an SBSD
filed with the Commission, MUFG Securities EMEA made untrue statements, including in
certifications, regarding its development and implementation of policies and procedures to prevent
these failures.

2. Every SBSD operating in U.S. markets, including non-U.S. SBSDs, must register
with the Commission and comply with the Exchange Act’s provisions for SBSDs and the applicable
rules. Recognizing that many non-U.S. SBSDs also must comply with comparable foreign
requirements, in 2021 the Commission issued a series of orders granting covered non-U.S. SBSDs
the option to elect to apply substituted compliance. As discussed below, under an order of
substituted compliance, covered SBSDs could choose to satisfy certain requirements under
Exchange Act Section 15F and certain rules thereunder by complying with comparable foreign
requirements plus satisfying additional conditions that the Commission imposed in the applicable
order. To elect to apply substituted compliance, an SBSD must, among other things, notify the
Commission in writing of its intent to do so.

3. The substituted compliance framework is intended to promote efficiency and

competition by helping to address potential duplication and inconsistency between relevant U.S. and
foreign regulatory requirements. Substituted compliance is not exemptive relief but is instead an
alternative method by which non-U.S. SBSDs may comply with some applicable requirements of
the Exchange Act and the rules thereunder.

4. From its November 1, 2021, conditional registration as an SBSD until October 4,

2024 (the “Relevant Period”), MUFG Securities EMEA failed to satisfy required substituted
compliance conditions consistent with its notice to the Commission of its intent to apply substituted
compliance to satisfy certain requirements of Exchange Act Section 15F and certain rules

1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not

binding on any other person or entity in this or any other proceeding.

thereunder. Consequently, MUFG Securities EMEA was required to comply directly with the
SBSD capital recordkeeping, financial reporting, compliance, internal supervision, and internal risk
management requirements of the Exchange Act and rules thereunder. MUFG Securities EMEA did
not.

5. MUFG Securities EMEA’s violations were attributable to its failure to develop and

implement policies and procedures to ensure satisfaction of all applicable substituted compliance
conditions, despite representations in its application for registration with the Commission as an
SBSD that it had done so. These failures and resulting violations lasted nearly three years and
involved failures to comply with multiple requirements of the Exchange Act.

Respondent

6. MUFG Securities EMEA plc (“MUFG Securities EMEA”) is an SBSD

conditionally registered with the Commission and is located in the United Kingdom (“UK”). Since
its conditional registration on November 1, 2021, MUFG Securities EMEA had total revenues of
approximately $2 billion and net income of approximately $268 million. MUFG Securities EMEA
also is regulated as a designated investment firm by the UK’s Prudential Regulation Authority
(“PRA”) and Financial Conduct Authority (“FCA”).

Background

7. Exchange Act Rule 3a71-6 permits a registered SBSD that is not a U.S. person to
elect to satisfy certain requirements under Exchange Act Section 15F and certain rules thereunder
by complying with an applicable substituted compliance order issued by the Commission. The rule
requires any SBSD electing to apply substituted compliance both to comply with comparable
foreign requirements and to satisfy any additional conditions that the Commission imposes in the
applicable order.

8. In 2021, the Commission issued a substituted compliance order with respect to

certain UK-regulated SBSDs and entered an arrangement addressing substituted compliance
supervisory and enforcement cooperation with certain UK authorities. See Order Granting
Conditional Substituted Compliance in Connection with Certain Requirements Applicable to Non-
U.S. Security-Based Swap Dealers and Major Security-Based Swap Participants Subject to
Regulation in the United Kingdom, Release No. 34-92529, dated July 31, 2021, amended by
Release No. 34-93411, dated October 22, 2021 (the “SEC UK Entities Order”). The SEC UK
Entities Order specifies in detail the comparable UK requirements and additional conditions that an
SBSD must satisfy to apply substituted compliance.

9. On October 27, 2021, MUFG Securities EMEA submitted a notice in writing to the

Commission of its election to apply substituted compliance pursuant to the SEC UK Entities Order.

10. On November 10, 2021, MUFG Securities EMEA submitted a corrected notice to

the Commission of its election to apply substituted compliance pursuant to the SEC UK Entities

Order to satisfy, among other requirements: the capital requirements of Exchange Act Section
15F(e) and Exchange Act Rules 18a-1 and 18a-1a through 18a-1d; certain recordkeeping and
financial reporting requirements of Exchange Act Rules 18a-5 through 18a-9; the compliance
requirements of Exchange Act Section 15F(k) and Exchange Act Rule 15Fk-1; the internal
supervision requirements of Exchange Act Sections 15F(j)(4)(A) and Exchange Act Rule 15Fh-
3(h); and the internal risk management requirements of Exchange Act Section 15F(j)(2) and
Exchange Act Rule 15Fh-3(h)(2)(iii)(I).

11. The SEC UK Entities Order conditions substituted compliance for the capital

requirements of Exchange Act Section 15F(e) and Exchange Act Rules 18a-1 and 18a-1a through
18a-1d on the SBSD being subject to and complying with both comparable UK capital requirements
and the Commission’s additional conditions, including that, beginning no later than January 1, 2022,
the SBSD (1) maintains certain levels of net liquid assets as defined in the SEC UK Entities Order,
and (2) makes and preserves a quarterly record of its satisfaction of that condition. By electing
substituted compliance for these capital requirements, MUFG Securities EMEA elected to satisfy
these conditions.

12. On November 1, 2023, Commission staff responsible for monitoring SBSD financial

reporting contacted MUFG Securities EMEA and requested MUFG Securities EMEA’s quarterly
records for the second and third quarters of 2023 of net liquid assets calculated in accordance with
the net liquid assets condition set forth in the SEC UK Entities Order. Approximately six weeks
later, on December 14, 2023, MUFG Securities EMEA informed the staff that it had not calculated
its net liquid assets under that test since it registered with the Commission, had not made any
quarterly records of its net liquid assets, and was not aware of the obligation to perform such
calculations and make such records on an ongoing basis after registration.

13. In response, Commission staff directed MUFG Securities EMEA to the relevant

provisions of the SEC UK Entities Order and asked MUFG Securities to perform post hoc tests of
its net liquid assets.

14. On January 9, 2024, more than two months after staff’s initial request, MUFG

Securities EMEA provided a single spreadsheet-based record of its net liquid assets as of June 30,
2023. The test record provided, however, was inaccurate because it contained a calculation error
that overstated MUFG Securities EMEA’s net liquid assets by approximately eighty percent. After
correcting the error, MUFG Securities EMEA reported sufficient net liquid assets to meet the SEC
UK Entities Order’s net liquid assets test on June 30, 2023.

15. To apply substituted compliance for the Commission’s capital requirements,

however, MUFG Securities EMEA was obligated under the SEC UK Entities Order to have made
and preserved quarterly records of its satisfaction of the net liquid assets condition since January 1,
2022, which it did not do.

16. On July 29, 2024, nearly nine months after Commission staff requested the required

quarterly records of MUFG Securities EMEA’s satisfaction of the net liquid assets condition, and

with additional records not having been received, staff informed MUFG Securities EMEA of the
opening of an enforcement investigation. MUFG Securities EMEA then commenced an internal
investigation to identify the cause of its failure to make the required quarterly records, as well as any
other failures with respect to satisfying conditions of the SEC UK Entities Order.

17. Three weeks later, on August 21, 2024, MUFG Securities EMEA produced records

of additional post hoc net liquid assets tests that covered the eleven quarter-ends between December
2021 and June 2024. Based on these records, MUFG Securities EMEA reported to the Commission
that it had sufficient net liquid assets to satisfy the SEC UK Entities Order’s net liquid assets
condition on the eleven quarter-end dates. Although MUFG Securities EMEA’s post hoc records
stated that MUFG Securities EMEA maintained sufficient net liquid assets to meet the SEC UK
Entities Order test on each quarter-end date, MUFG Securities EMEA did not timely make those
records on a quarterly basis as required by the SEC UK Entities Order.

18. MUFG Securities EMEA’s post hoc creation of the records did not retroactively

meet its quarterly recordkeeping obligations. As a result, MUFG Securities EMEA did not apply
substituted compliance for the capital requirements of Exchange Act Section 15F(e) and Exchange
Act Rules 18a-1 and 18a-1a through 18a-1d during the Relevant Period.

MUFG Securities EMEA Failed to Satisfy the Conditions to Apply Substituted Compliance

for Certain SBSD Capital Recordkeeping Requirements and
Failed to Comply Directly with the Exchange Act

19. MUFG Securities EMEA elected to apply substituted compliance to satisfy the

recordkeeping requirements of Exchange Act Rule 18a-5(a)(9). A firm may apply substituted
compliance for these recordkeeping requirements only on the condition that it also applies
substituted compliance for the capital requirements of Exchange Act Section 15F(e) and Exchange
Act Rules 18a-1 and 18a-1a through 18a-1d. MUFG Securities EMEA did not apply substituted
compliance for those capital requirements during the Relevant Period. As a result, MUFG Securities
EMEA did not satisfy this condition and therefore did not apply substituted compliance for the
recordkeeping requirements of Exchange Act Rule 18a-5(a)(9). It was, therefore, required to
comply directly with Exchange Act Rule 18a-5(a)(9).

20. MUFG Securities EMEA failed to comply directly with Exchange Act Section

15F(f) and Exchange Act Rule 18a-5(a)(9). Direct compliance required MUFG Securities EMEA to
make a record—at least monthly—of the computation of net capital under Exchange Act Rule 18a-
1. Since registering with the Commission, MUFG Securities EMEA did not compute its net capital
in accordance with Exchange Act Rule 18a-1 or create the records required by Exchange Act
Section 15F(f) and Exchange Act Rule 18a-5(a)(9) documenting those net capital computations.

MUFG Securities EMEA Failed to Satisfy the Conditions to Apply
Substituted Compliance for Certain SBSD Financial Reporting Requirements and

Failed to Comply Directly with the Exchange Act

21. MUFG Securities EMEA also elected to apply substituted compliance to satisfy the
financial reporting requirements of certain provisions of Exchange Act Rule 18a-7. A firm may
apply substituted compliance for Exchange Act Rule 18a-7(a)(1) and (c) only on the condition that
it also applies substituted compliance for the capital requirements of Exchange Act Section 15F(e)
and Exchange Act Rules 18a-1 and 18a-1a through 18a-1d. Because MUFG Securities EMEA did
not apply substituted compliance for these capital requirements during the Relevant Period, it did
not satisfy the conditions to apply, and thus did not apply, substituted compliance for the financial
reporting requirements of Exchange Act Rule 18a-7(a)(1) and (c) during that time.

22. MUFG Securities EMEA also elected to apply substituted compliance to satisfy the

public disclosure requirements of Exchange Act Rule 18a-7(b). A firm may apply substituted
compliance for Exchange Act Rule 18a-7(b) only on the condition that it also applies substituted
compliance for the recordkeeping requirements of Exchange Act Rule 18a-6(b)(1)(viii). A firm
may, in turn, apply substituted compliance for Exchange Act Rule 18a-6(b)(1)(viii) only on the
condition that it also applies substituted compliance for the capital requirements of Exchange Act
Section 15F(e) and Exchange Act Rules 18a-1 and 18a-1a through 18a-1d. Because MUFG
Securities EMEA did not apply substituted compliance for those capital requirements during the
Relevant Period, MUFG Securities EMEA did not satisfy the conditions to apply, and therefore, did
not apply, substituted compliance for the recordkeeping requirements of Exchange Act Rule 18a-
6(b)(1)(viii). As a result, MUFG Securities EMEA also did not apply substituted compliance for the
public disclosure requirements of Exchange Act Rule 18a-7(b) during that time.

23. To apply substituted compliance for Exchange Act Rule 18a-7(c), a firm must send

the Commission a copy of its UK annual audited financial reports simultaneously with the firm’s
filing of those reports with the PRA. MUFG Securities EMEA has never sent the Commission
copies of its UK annual audited financial reports for the fiscal year ended December 31, 2021.
MUFG Securities EMEA sent the Commission late copies of its UK annual audited financial
reports for the fiscal year ended December 31, 2023, on July 18, 2024, eighteen days after those
reports were filed with the PRA, and only after Commission staff requested them. MUFG
Securities EMEA sent the Commission copies of its UK annual audited financial reports for the
fiscal year ended December 31, 2022, on October 9, 2024, more than fifteen months after those
reports were filed with the PRA, and again only after Commission staff requested them. As a
result, MUFG Securities EMEA did not apply substituted compliance for Exchange Act Rule 18a-
7(c) during the Relevant Period.

24. To apply substituted compliance for Exchange Act Rule 18a-7(c), a firm also must

send to the Commission the annual reports required by Exchange Act Rule 18a-7(c)(1)(i)(B) and
(C) addressing the firm’s compliance with or exemption from the segregation requirements of
Exchange Act Rule 18a-4. MUFG Securities EMEA has not sent these reports to the Commission

for the fiscal years that ended within the Relevant Period. As a result, MUFG Securities EMEA did
not apply substituted compliance for Exchange Act Rule 18a-7(c) during the Relevant Period.

25. Because MUFG Securities EMEA did not apply substituted compliance for

Exchange Act Rules 18a-7(a)(1), 18a-7(b), and 18a-7(c), it was required to comply directly with
those rules.

26. MUFG Securities EMEA failed to comply directly with Exchange Act Section

15F(f) and Exchange Act Rule 18a-7(a)(1). Direct compliance required MUFG Securities EMEA to
file complete monthly Financial and Operational Combined Uniform Single (“FOCUS”) reports
with its full net capital computations under Exchange Act Rule 18a-1. Instead, in an effort to satisfy
a condition to apply substituted compliance, MUFG Securities EMEA filed simplified FOCUS
Reports presenting capital metrics only pursuant to its UK capital requirements.

27. MUFG Securities EMEA failed to comply directly with Exchange Act Section

15F(f) and Exchange Act Rule 18a-7(b). Direct compliance required MUFG Securities EMEA to
make certain financial disclosures publicly available on its website, including a statement of
financial condition prepared in accordance with U.S. generally accepted accounting principles and a
statement of the SBSD’s net capital computed in accordance with Exchange Act Rule 18a-1, within
10 business days after the firm is required to file annual reports with the Commission. In addition,
pursuant to this rule, an SBSD is also required to post half-year unaudited statements. MUFG
Securities EMEA has not made any of these public disclosures.

28. MUFG Securities EMEA failed to comply directly with Exchange Act Section
15F(f) and Exchange Act Rule 18a-7(c). Direct compliance required MUFG Securities EMEA to
file with the Commission annual financial reports prepared in accordance with U.S. generally
accepted accounting principles and that include a supporting schedule of its computation of net
capital under Exchange Act Rule 18a-1, annual reports of its exemption from the segregation
requirements of Exchange Act Rule 18a-4, and independent public accountants’ reports for each
prepared in accordance with U.S. generally accepted auditing standards. MUFG Securities EMEA
instead sent to the Commission some, but not all, of the comparable annual reports described in the
relevant conditions of the SEC UK Entities Order, and even those reports arrived late after
prompting from Commission staff. The submission of these UK financial reports did not satisfy the
requirements of Exchange Act Rule 18a-7(c).

MUFG Securities EMEA Failed to Satisfy the Conditions to Apply
Substituted Compliance for SBSD Compliance Requirements and

Failed to Comply Directly with the Exchange Act

29. MUFG Securities EMEA also elected to apply substituted compliance to satisfy the
SBSD compliance requirements of Exchange Act Section 15F(k) and Exchange Act Rule 15Fk-1.
These provisions contain requirements related to the submission and content of annual compliance
reports and reasonable steps to address non-compliance issues.

30. A firm may apply substituted compliance for these requirements only on the
condition that all the firm’s comparable UK compliance reports be provided to the Commission
within fifteen days of the earlier of submission to the firm’s management body or the time the report
is required to be submitted to the management body. Where a firm submits multiple compliance
reports to its management body, each of those reports is required to be provided to the Commission
within the 15-day deadline. MUFG Securities EMEA failed to provide the required compliance
reports consistent with the substituted compliance 15-day deadline during the Relevant Period.

31. MUFG Securities EMEA has not provided the Commission any of its UK

compliance reports submitted to its management body in 2021.

32. MUFG Securities EMEA provided the Commission its 2022 UK compliance reports

in bulk on November 8, 2023. These reports were provided to the Commission between eleven and
twenty-one months after they were provided to MUFG Securities EMEA’s management body.

33. MUFG Securities EMEA provided the Commission its 2023 UK compliance

reports in bulk on April 12, 2024. These reports were provided to the Commission between four
and fourteen months after they were provided to MUFG Securities EMEA’s management body.

34. MUFG Securities EMEA provided the Commission its UK compliance reports for

the first three quarters of 2024 in bulk on October 4, 2024. Two of these reports, dated September
19, 2024, were provided to the Commission within the SEC UK Entities Order’s 15-day deadline,
but the remainder were provided up to eight months after they were provided to MUFG Securities
EMEA’s management body.

35. As a result of these failings, MUFG Securities EMEA failed to apply substituted

compliance for any of the SBSD compliance requirements of Exchange Act Section 15F(k) and
Exchange Act Rule 15Fk-1 during the Relevant Period and, therefore, was required to comply
directly with all of those requirements, including requirements related to the submission and
required content of annual compliance reports and reasonable steps to address non-compliance
issues.

36. MUFG Securities EMEA failed to comply directly with Exchange Act Rule 15Fk-

1(c)(2)(i)(C)-(D), which requires MUFG Securities EMEA to submit to the Commission an annual
compliance report containing a description of any areas for improvement to its compliance program,
as well as any material non-compliance matters identified, which includes weaknesses in the design
or implementation of the policies and procedures relating to its business as an SBSD. The annual
compliance report is due within thirty days following the deadline for filing the firm’s annual
financial report with the Commission. During the Relevant Period, this annual compliance report
was due on March 31, 2023, and March 30, 2024.

37. On March 31, 2023, MUFG Securities EMEA submitted to the Commission a
compliance report for the period from November 1, 2021, through December 31, 2022. In the
report, MUFG Securities EMEA did not identify all known areas for improvement to its SBSD

compliance program, nor did it describe matters identified in its internal audit reports that
constituted material non-compliance. For example, MUFG Securities EMEA’s October 2022
internal audit report stated that its compliance program for complete, accurate and timely
submission of required reports to the firm’s regulatory authorities needed “significant
improvement.” MUFG Securities EMEA’s compliance report did not describe this material non-
compliance matter and area for improvement, however.

38. On April 12, 2024, MUFG Securities EMEA provided the Commission its 2023

UK compliance reports in bulk, as described above. None of these reports, including at least four
dated after MUFG Securities EMEA’s correspondence with Commission staff on November 1,
2023, contained any description of areas for improvement in the firm’s substituted compliance
program or the firm’s known, material non-compliance matters in the area of substituted
compliance, such as failing to make the required net liquid assets quarterly records. One such
report, dated November 29, 2023, stated generally, under Areas for Improvement, that the firm’s
SBSD manual needed to be reviewed and updated “where necessary,” but it identified no needed
updates and described no weaknesses in the design or implementation of the substituted
compliance policies and procedures. It also inaccurately stated that no material non-compliance
matters had been identified from January 1, 2023, through November 22, 2023, even though
MUFG Securities EMEA was aware at that time of material non-compliance issues.

39. MUFG Securities EMEA also failed to comply directly with Exchange Act Rule

15Fk-1(b)(2)(ii)-(iii), which requires an SBSD, through its chief compliance officer, to take
reasonable steps to ensure that the SBSD establishes, maintains and reviews policies and
procedures reasonably designed to remediate identified non-compliance issues and establishes and
follows procedures reasonably designed for the handling, management response, remediation,
retesting and resolution of non-compliance issues.

40. MUFG Securities EMEA and its chief compliance officer knew as of October 2022,

based on information in an internal audit report, that the overall control environment for its
regulatory reporting submission framework required “significant improvement.” The report
concluded that MUFG Securities EMEA had not established key elements in the regulatory
reporting submission framework, including clarification of accountabilities and delegations, setting
common standards, risk assessment frameworks and quality assurance standards. It also concluded
that the absence of a robust regulatory reporting submission framework with clearly defined
requirements and standards could result in an ineffective level of oversight.

41. Nevertheless, MUFG Securities EMEA waited until after July 29, 2024—when

Commission staff informed MUFG Securities EMEA that it was opening an enforcement
investigation—to begin testing the firm’s policies and procedures for errors and gaps in relation to
applicable conditions of the SEC UK Entities Order. On September 10, 2024, weeks later, MUFG
Securities EMEA amended its application for registration as an SBSD to report that it had begun to
review its policies and procedures to ensure they are reasonably designed to satisfy applicable
conditions to the SEC UK Entities Order. The nearly two-year delay in remediation was not a
reasonable step toward ensuring that MUFG Securities EMEA established, maintained, and

reviewed policies and procedures reasonably designed to remediate non-compliance issues, nor
was it a reasonable step toward ensuring that MUFG Securities EMEA established and followed
procedures reasonably designed for the handling, management response, remediation, retesting,
and resolution of non-compliance issues.

MUFG Securities EMEA Failed to Satisfy the Conditions to Apply

Substituted Compliance for SBSD Internal Supervision Requirements and
Failed to Comply Directly with the Exchange Act

42. MUFG Securities EMEA elected to apply substituted compliance to satisfy the

internal supervision requirements of Exchange Act Sections 15F(j)(4)(A) and Exchange Act Rule
15Fh-3(h). The SEC UK Entities Order provides that a firm may apply substituted compliance for
these internal supervision requirements only on the condition that it complies with comparable UK
internal supervision requirements as if those UK requirements also require compliance with
applicable conditions of the SEC UK Entities Order, such as, in MUFG Securities EMEA’s case,
the conditions related to net liquid assets and the provision of UK compliance reports to the
Commission. Because the comparable UK internal supervision requirements do not require internal
supervision of the applicable conditions of the SEC UK Entities Order, this “as-if” condition
requires a firm to add supervision of those conditions to its UK-mandated internal supervision
program.

43. During the Relevant Period, MUFG Securities EMEA failed to comply with

comparable UK internal supervision requirements as if they required compliance with the SEC UK
Entities Order’s conditions related to net liquid assets and the provision of UK compliance reports
to the Commission. MUFG Securities EMEA did not include these conditions of the SEC UK
Entities Order in its internal supervision program. As a result, MUFG Securities EMEA did not
apply substituted compliance for any of the internal supervision requirements of Exchange Act
Sections 15F(j)(4)(A) and Exchange Act Rule 15Fh-3(h) during the Relevant Period, and, therefore,
was required to comply directly with all of those requirements.

44. MUFG Securities EMEA did not comply directly with Exchange Act Rule 15Fh-

3(h)(1)-(2), which required MUFG Securities EMEA to establish and maintain a supervisory system
reasonably designed to prevent violations of the applicable federal securities laws and rules
thereunder relating to its business as an SBSD. This system must, among other things, provide for
the establishment, maintenance, and enforcement of written policies and procedures addressing the
supervision of the security-based swap business and the activities of its associated persons that are
reasonably designed to prevent such violations. Among other things, these written policies and
procedures must include, at a minimum, procedures for a periodic review, at least annually, of the
security-based swap business that is reasonably designed to assist in detecting and preventing such
violations.

45. During the Relevant Period, MUFG Securities EMEA did not establish, maintain

and enforce written policies and procedures that were reasonably designed to prevent MUFG
Securities EMEA from failing to satisfy the SEC UK Entities Order’s conditions related to net

liquid assets and the provision of UK compliance reports to the Commission, and thereby to prevent
MUFG Securities EMEA from violating the Exchange Act and rules thereunder for which it had
elected to apply substituted compliance.

46. MUFG Securities EMEA also failed to comply directly with Exchange Act Section
15F(j)(4)(A), which required MUFG Securities EMEA to establish and enforce internal systems and
procedures to obtain any necessary information to perform any of the functions described in Section
15F. As described in Exchange Act Section 15F(h)(1)(B), these Section 15F functions include
conforming with business conduct rules related to diligent supervision of MUFG Securities
EMEA’s business, such as Exchange Act Rule 15Fh-3(h). MUFG Securities EMEA did not have
systems or procedures to obtain the information needed to analyze its net liquid assets for purposes
of the SEC UK Entities Order before August 21, 2024, when the firm first created current records of
its net liquid assets. This analysis was a necessary component of MUFG Securities EMEA’s chosen
method for complying with Exchange Act capital, recordkeeping, and financial reporting
requirements, so information necessary to perform the analysis was also necessary to comply with
Exchange Act Rule 15Fh-3(h).

47. MUFG Securities EMEA also failed to comply directly with Exchange Act Rule

15Fh-3(h)(4), which required MUFG Securities EMEA to promptly amend its written supervisory
procedures as appropriate when material changes occurred in applicable securities laws or in its
business or supervisory system and to promptly communicate any material amendments to its
supervisory procedures to all relevant associated persons. After discussing its capital-related
substituted compliance failures with Commission staff beginning on November 1, 2023, MUFG
Securities EMEA failed to promptly update its written supervisory procedures to address applicable
conditions of the SEC UK Entities Order and to promptly communicate those updates to its
associated persons.

MUFG Securities EMEA Failed to Satisfy the Conditions to Apply

Substituted Compliance for SBSD Internal Risk Management Requirements and
Failed to Comply Directly with the Exchange Act

48. MUFG Securities EMEA elected to apply substituted compliance to satisfy the

internal risk management requirements of Exchange Act Section 15F(j)(2) and related aspects of
Exchange Act Rule 15Fh-3(h)(2)(iii)(I). A firm may apply substituted compliance for these internal
risk management requirements only on the condition that it is subject to and complies with the
comparable UK requirements specified in the SEC UK Entities Order. Those requirements include
the requirement to have effective processes to identify, manage, monitor, and report the risks to
which the firm is or might be exposed.

49. One of the risks to which MUFG Securities EMEA was or might be exposed was the

risk that it did not maintain sufficient assets to satisfy the SEC UK Entities Order’s net liquid assets
condition. After registering with the Commission, during the Relevant Period MUFG Securities
EMEA (a) never calculated its net liquid assets as required by the SEC UK Entities Order, except
for one test, in response to a request from Commission staff, calculating the firm’s net liquid assets

on June 30, 2023, which contained errors; (b) did not make required quarterly records of its net
liquid assets; and (c) lacked responsible staff aware of the obligation to perform such calculations
and make such records. Between its registration and August 21, 2024, MUFG Securities EMEA
never assessed whether it maintained the requisite levels of net liquid assets to satisfy the SEC UK
Entities Order. These lapses arose from ineffective processes to identify, manage, monitor, and
report the risk that MUFG Securities EMEA did not maintain sufficient assets to satisfy the SEC
UK Entities Order. As a result, MUFG Securities EMEA did not apply substituted compliance for
the internal risk management requirements of Exchange Act Section 15F(j)(2) and related aspects of
Exchange Act Rule 15Fh-3(h)(2)(iii)(I) during the Relevant Period, and, therefore, was required to
comply directly with those requirements.

50. MUFG Securities EMEA failed to comply directly with Exchange Act Section

15F(j)(2). Direct compliance with that section required MUFG Securities EMEA to establish a
robust and professional risk management system adequate for managing its business. During the
Relevant Period, MUFG Securities EMEA’s risk management system did not address the risk that it
would not maintain sufficient net liquid assets to satisfy the SEC UK Entities Order and thus was
not a robust and professional risk management system adequate for managing its business.

51. MUFG Securities EMEA also failed to comply directly with Exchange Act Rule

15Fh-3(h)(2)(iii)(I) in the context of its obligations under Exchange Act Section 15F(j)(2). Direct
compliance required MUFG Securities EMEA to establish, maintain, and enforce written
procedures reasonably designed, taking into consideration the nature of MUFG Securities EMEA’s
business, to comply with the internal risk management requirements of Exchange Act Section
15F(j)(2). During the Relevant Period, MUFG Securities EMEA’s written compliance procedures
did not address its management of the risk that it would not maintain sufficient net liquid assets to
satisfy the SEC UK Entities Order and therefore were not reasonably designed to comply with
Exchange Act Section 15F(j)(2) in the manner that MUFG Securities EMEA had elected to comply.

MUFG Securities EMEA Made Untrue Statements

in Its Application for Registration Filed with the Commission

52. MUFG Securities EMEA made untrue statements to the Commission concerning its
policies and procedures. In its application for registration as an SBSD filed with the Commission,
MUFG Securities EMEA included statements that it had policies and procedures to satisfy
applicable provisions of the Exchange Act and applicable conditions of the SEC UK Entities Order.

53. Specifically, in its October 29, 2021, and February 16, 2022, Form SBSE-A

applications for registration as an SBSD, MUFG Securities EMEA stated: MUFG Securities EMEA
“will be applying the SEC’s UK final substituted compliance order. Where the SEC has provided
conditions to the order, the Firm[’]s Legal department have reviewed, and evidence of polic[i]es,
procedures, and controls, in place to close out these items has been completed. Impacted functional
area owners assigned the conditions and have provided sign off as to compliance.” It further stated
that the officer signing the Form SBSE-A “certifies that he/she has executed this form on behalf of,
and with the authority of, said applicant” and that the “applicant represent[s] that the information

and statements contained herein, including schedules attached hereto, and other information filed
herewith are current, true and complete.”

54. When these statements were made, as set forth above, MUFG Securities EMEA

lacked a full set of policies, procedures, and controls to satisfy all of the conditions to the SEC UK
Entities Order and the Exchange Act.

55. The process by which MUFG Securities EMEA prepared for registration with the

Commission as an SBSD did not produce a full set of policies and procedures reasonably designed
to prevent violations of all applicable federal securities laws and rules thereunder. MUFG Securities
EMEA’s preparation for registration included an oral attestation process whereby personnel with
expertise over specific business areas were directed to establish and implement necessary policies
and procedures and then attest to the chief compliance officer and registration steering committee
that they had done so, but MUFG Securities EMEA conducted no other verification that they had in
fact done so, including review of policies and procedures. If it had conducted a reasonable
verification process, it would have discovered that not all necessary policies and procedures existed.
Additionally, MUFG Securities EMEA had no process to ensure that all the conditions to the SEC
UK Entities Order were complied with on an ongoing basis because MUFG Securities EMEA did
not develop or implement policies and procedures to ensure compliance over time.

56. Therefore, these statements made on behalf of MUFG Securities EMEA in its Form

SBSE-A filings were not true.

Violations

57. As a result of the conduct described above, MUFG Securities EMEA willfully2
violated Exchange Act Section 15F(f) and Exchange Act Rules 18a-5(a)(9), 18a-7(a)(1), 18a-7(b),
and 18a-7(c), which set forth SBSD capital recordkeeping and financial reporting requirements.

58. As a result of the conduct described above, MUFG Securities EMEA willfully

violated Exchange Act Section 15F(k) and Exchange Act Rules 15Fk-1(b)(2)(ii)-(iii) and 15Fk-
1(c)(2)(i)(C)-(D), which set forth SBSD compliance requirements.

2 “Willfully,” for purposes of imposing relief under Sections 15F and 15(b) of the Exchange Act,
“‘means no more than that the person charged with the duty knows what he is doing.’” Wonsover
v. SEC, 205 F.3d 408, 414 (D.C. Cir 2000) (quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir.
1949)). There is no requirement that the actor “also be aware that he is violating one of the Rules
or Acts.” Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965). The decision in The Robare Group, Ltd. v.
SEC, which construed the term “willfully” for purposes of a differently structured statutory
provision, does not alter that standard. 922 F.3d 468, 478-79 (D.C. Cir. 2019) (setting forth the
showing required to establish that a person has “willfully omit[ted]” material information from a
required disclosure in violation of Section 207 of the Advisers Act).

59. As a result of the conduct described above, MUFG Securities EMEA willfully
violated Exchange Act Sections 15F(h), 15F(j)(2) and 15F(j)(4)(A) and Exchange Act Rules 15Fh-
3(h)(1)-(2) and 15Fh-3(h)(4), which set forth SBSD internal supervision and internal risk
management requirements.

60. As a result of the conduct described above, MUFG Securities EMEA willfully

violated Exchange Act Rule 15Fb2-1, which requires SBSDs to submit to the Commission a
complete application for registration, including, for applicants relying on a previously granted
substituted compliance determination, a description of how the applicant satisfies any conditions
the Commission may have placed on such substituted compliance determination.

MUFG Securities EMEA’s Remedial Efforts and
Cooperation with the Commission’s Investigation

61. In determining to accept the Offer, the Commission considered remedial acts

promptly undertaken by Respondent in response to the investigation and cooperation afforded the
Commission staff during its investigation. Upon learning of the Commission’s investigation, MUFG
Securities EMEA retained counsel and began an internal investigation to understand the breadth and
scope of its substituted compliance and Exchange Act failures. MUFG Securities EMEA
retroactively tested its net liquid assets as of 11 quarter-end dates and did not identify any ongoing
deficiencies in net liquid assets as defined in the SEC UK Entities Order. MUFG Securities EMEA
representatives and counsel also met with Commission staff and accepted responsibility for certain
failures to satisfy the conditions under the SEC UK Entities Order. MUFG Securities EMEA then
self-reported additional failures that came to light from its internal investigation, which it
remediated, and which were not charged.

62. MUFG Securities EMEA has begun remediating its deficiencies and demonstrating

efforts to address any other failings it finds while it continues to produce and correct required
records. As discussed below, these remedial measures included engaging a third-party consultant to
assist MUFG Securities EMEA with better regulatory compliance.

IV.

Undertakings

63. Prior to this action, MUFG Securities EMEA engaged a consultant (the
“Compliance Consultant”) to conduct a comprehensive review of Respondent’s security-based swap
dealer compliance program and implementation, and effectiveness of policies and procedures
designed to ensure compliance with applicable U.S. federal securities laws related to recordkeeping
and reporting, supervision, internal risk, and compliance, including applicable conditions of the
SEC UK Entities Order. The Compliance Consultant’s engagement includes identification of areas
where MUFG Securities EMEA needs additional policies and procedures plus testing after the new
policies and procedures have been established to ensure they address MUFG Securities EMEA’s
obligations in practice. The scope of the engagement covers MUFG Securities EMEA’s obligations

as a security-based swap dealer under the Exchange Act and the additional non-UK requirements set
forth in the SEC UK Entities Order.

64. The engagement requires the Compliance Consultant to submit to MUFG Securities

EMEA a report that describes the review performed by the Compliance Consultant, the names of
the individuals who performed the review, the conclusions reached, and the Compliance
Consultant’s recommendations, including for changes in or improvements to Respondent’s security-
based swap dealer compliance program (the “Report”). As part of the remedial measures already in
progress, and given the nature and scope of the Commission’s claims, Respondent has undertaken
to:

a. Within 240 days of the entry of this Order, (1) complete the comprehensive

review, with the assistance of the Compliance Consultant, of its security-based swap dealer
compliance program and the implementation and effectiveness of policies and procedures
designed to ensure compliance with applicable U.S. federal securities laws related to
recordkeeping and reporting, supervision, internal risk, and compliance, and (2) make all necessary
changes to address the conclusions of the comprehensive review undertaken pursuant to this
paragraph and to implement the recommendations of the Compliance Consultant.

b. Within 250 days of the entry of this Order, certify, in writing, compliance

with the undertakings ordered pursuant to Section V.C below. The certification shall state that
MUFG Securities EMEA has completed the comprehensive review set forth in paragraph 63 above;
is not aware of any ongoing violations of the U.S. federal securities laws, including applicable
conditions of the SEC UK Entities Order; and either (1) has made all necessary changes to address
the conclusions of the comprehensive review and to implement recommendations of the
Compliance Consultant, or (2) in the event Respondent does not implement all recommendations
made by the Compliance Consultant, and the Compliance Consultant does not agree that an
alternative implemented policy, procedure, or disclosure would achieve the same objective or
purpose, the certification shall identify the consultant recommendations that Respondent did not
implement. The Commission staff may make reasonable requests for further evidence of
compliance, and Respondent agrees to provide such evidence. The certification and supporting
material shall be submitted to Anne Blazek, Assistant Director, Complex Financial Instruments
Unit, Securities and Exchange Commission, Chicago Regional Office, 175 West Jackson
Boulevard, Suite 1450, Chicago, IL 60604, or such other address as the Commission may provide,
with a copy to the Office of Chief Counsel of the Division of Enforcement, Securities and Exchange
Commission, 100 F Street, NE, Washington, DC 20549.

c. For good cause shown, the Commission may extend any of the procedural

dates relating to these undertakings. Deadlines for procedural dates shall be counted in calendar
days, except that if the last day falls on a weekend or federal holiday, the next business day shall be
considered the last day.

In view of the foregoing, the Commission deems it appropriate and in the public interest to
impose the sanctions agreed to in Respondent’s Offer.

Accordingly, pursuant to Sections 15F(l)(2) and 21C of the Exchange Act it is hereby
ORDERED that:

A. Respondent cease and desist from committing or causing any violations and any
future violations of Exchange Act Sections 15F(f), 15F(h), 15F(k), 15F(j)(2), and 15F(j)(4)(A) and
Rules 15Fb2-1, 15Fh-3(h)(1)-(2), 15Fh-3(h)(4), 15Fk-1(b)(2)(ii)-(iii), 15Fk-1(c)(2)(i)(C)-(D), 18a-
5(a)(9), 18a-7(a)(1), 18a-7(b), and 18a-7(c) promulgated thereunder.

B. Respondent is censured.

C. Respondent shall comply with the undertakings enumerated in Section IV above.

D. Respondent shall, within 10 days of the entry of this Order, pay a civil money
penalty in the amount of $9,800,000 to the Securities and Exchange Commission for transfer to the
general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely
payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.

Payment must be made in one of the following ways:

(1) Respondent may transmit payment electronically to the Commission, which
will provide detailed ACH transfer/Fedwire instructions upon request;

(2) Respondent may make direct payment from a bank account via Pay.gov

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or

(3) Respondent may pay by certified check, bank cashier’s check, or United

States postal money order, made payable to the Securities and Exchange
Commission and hand-delivered or mailed to:

Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying

MUFG Securities EMEA plc as a Respondent in these proceedings, and the file number of these
proceedings; a copy of the cover letter and check or money order must be sent to Eric Werner,
Complex Financial Instruments Unit Chief, Division of Enforcement, Securities and Exchange
Commission, 801 Cherry Street, Suite 1900, Unit 18, Fort Worth, TX 76102.

E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be
treated as penalties paid to the government for all purposes, including all tax purposes. To preserve

http://www.sec.gov/about/offices/ofm.htm

the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, it
shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of
compensatory damages by the amount of any part of Respondent’s payment of a civil penalty in
this action (“Penalty Offset”). If the court in any Related Investor Action grants such a Penalty
Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting the
Penalty Offset, notify the Commission's counsel in this action and pay the amount of the Penalty
Offset to the Securities and Exchange Commission. Such a payment shall not be deemed an
additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed
in this proceeding. For purposes of this paragraph, a “Related Investor Action” means a private
damages action brought against Respondent by or on behalf of one or more investors based on
substantially the same facts as alleged in the Order instituted by the Commission in this
proceeding.

F. Respondent acknowledges that the Commission is not imposing a penalty in excess
of $9,800,000 based upon, among other things, its cooperation and remedial efforts in a
Commission investigation and related enforcement action. If at any time following the entry of the
Order, the Division of Enforcement (“Division”) obtains information indicating that Respondent
knowingly provided materially false or misleading information or materials to the Commission, or
in a related proceeding, the Division may, at its sole discretion and with prior notice to the
Respondent, petition the Commission to reopen this matter and seek an order directing that the
Respondent pay an additional civil penalty. Respondent may contest by way of defense in any
resulting administrative proceeding whether it knowingly provided materially false or misleading
information, but may not: (1) contest the findings in the Order; or (2) assert any defense to liability
or remedy, including, but not limited to, any statute of limitations defense.

By the Commission.

Vanessa A. Countryman
Secretary

UNITED STATES OF AMERICA
In the Matter of
Respondent.
Summary
Respondent
Background
MUFG Securities EMEA Failed to Satisfy the Conditions to Apply Substituted Compliance
for Certain SBSD Capital Recordkeeping Requirements and Failed to Comply Directly with the Exchange Act
MUFG Securities EMEA Failed to Satisfy the Conditions to Apply Substituted Compliance for Certain SBSD Financial Reporting Requirements and Failed to Comply Directly with the Exchange Act
MUFG Securities EMEA Failed to Satisfy the Conditions to Apply Substituted Compliance for SBSD Compliance Requirements and Failed to Comply Directly with the Exchange Act
MUFG Securities EMEA Failed to Satisfy the Conditions to Apply Substituted Compliance for SBSD Internal Supervision Requirements and Failed to Comply Directly with the Exchange Act
MUFG Securities EMEA Failed to Satisfy the Conditions to Apply Substituted Compliance for SBSD Internal Risk Management Requirements and Failed to Comply Directly with the Exchange Act
MUFG Securities EMEA Made Untrue Statements in Its Application for Registration Filed with the Commission

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