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Matthias Knab, Opalesque:

On August 6, 2025, the U.S. Securities and Exchange Commission (SEC) announced a settled enforcement action against MUFG Securities EMEA plc, a UK-based security-based swap dealer (SBSD) registered with the SEC. The firm agreed to pay a $9.8 million civil penalty and was censured for multiple violations of the U.S. Securities Exchange Act of 1934.

The core issue: For nearly three years following its registration in November 2021, MUFG Securities EMEA failed to comply with U.S. SBSD regulations - either directly or under the "substituted compliance" regime for foreign firms. The SEC found extensive deficiencies across capital, recordkeeping, financial reporting, internal supervision, risk management, and compliance oversight.

What is "substituted compliance"? This framework allows non-U.S. SBSDs to meet certain SEC rules by complying with comparable home-country regulations, plus specific additional conditions set by the SEC. MUFG notified the SEC that it would use this pathway, but failed to meet the required conditions - essentially defaulting on both U.S. and UK standards.

Notable findings:

• MUFG never calculated or recorded its "net liquid assets" quarterly, as required under the SEC's UK Entities Order. When it attempted a retroactive calculation, the figures were off by 80% due to a spreadsheet error.
• It failed to submit annual UK compliance reports on time - ......................

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