TOKYO - UBS AG received a surprise inspection by Japanese regulators, the government's second unannounced probe in the last two days.
The Financial Services Agency audit of Switzerland's biggest bank, its investment banking unit, and trust bank, comes as regulators push forward with a 1998 pledge to inspect all brokerages with operations in Japan within two years for lax compliance or violations of securities laws.
"As far as I know, they are inspecting UBS AG, UBS Warburg [Japan] Ltd., and UBS Trust & Banking Ltd.," a UBS spokeswoman said. "UBS will cooperate fully with the inspection."
The probes, which typically take several months, disrupt business and often inconvenience clients. Almost all investigations of foreign firms have so far led to the discovery of violation of securities laws and the imposition of penalties.
Merrill Lynch & Co. was the most recent firm to be penalized. The investment bank was forced to suspend its Tokyo swap trading operations for five days in July after infractions were found during a February audit.
The FSA's Securities and Exchange Surveillance Commission, however, investigated Warburg Dillon Read, which has since been renamed UBS Warburg, in February 1999 and didn't report finding evidence of violations.
Authorities began a review Wednesday of Diawa Securities Group Inc. and its capital markets affiliate, beginning another wave of inspections after a two-month break.
Goldman Sachs Group, J.P. Morgan & Co., Morgan Stanley Dean Witter & Co., Nikko Salomon Smith Barney Ltd., and HSBC Holdings PLC have yet to be audited in the two-year sweep.