THE Tokyo branch of the investment banking giant UBS has launched an internal inquiry into the disappearance of a computer disk thought to contain highly sensitive client information.

The loss of the disk is expected to prompt an investigation by the Japanese regulator, the Financial Services Agency (FSA), which was told of the incident on Friday.

An FSA spokesman said that the agency took data leaks “extremely seriously”.

According to sources within UBS, the lost disk contains data generated by the bank’s equities division and could include confidential trading histories, stop-loss orders and other sensitive information on corporate clients.

UBS confirmed that the bank was conducting an investigation into the disk’s disappearance and admitted that “there may be a loss of client data”. Sources told The Times that the loss of the disk — a portable hard disk that looks similar to an iPod and can hold “vast quantities of information” — had been discovered during a software upgrade conducted between the group’s Tokyo and Hong Kong offices. The disk was supposed to have been destroyed but it now appears that it may have become lost in a confusion over which department was responsible for disposing of it.

Although the metal case that once contained the disk is understood to have been retrieved, the storage machinery inside was gone. It is not known whether the disk has fallen into the hands of anyone outside the bank.

UBS informed the FSA late last week of the disk’s disappearance. It is unclear when the disk was actually lost. Masaaki Iizuka, in the securities division of the FSA, said: “We have not yet learnt when the disk was actually lost. Generally speaking the later we receive information, the worse the situation becomes.”

Internal safeguards would normally be expected to prevent sensitive information from being stored on portable disks of the sort that is now missing. In a number of financial institutions client data is often saved on network servers that never leave the building.

A new law requiring Japanese companies to improve data protection came into force in April. The issue has been further highlighted by some serious breaches of security in recent months. Information on more than 250,000 customers went missing from Mizuho bank in March and in January a man was arrested on suspicion of leaking personal data on about 24,600 mobile phone subscribers of NTT DoCoMo.

NOW YOU SEE THEM, NOW YOU DON'T

UBS is not alone, either in finance . . .

. . . or elsewhere

May 2004: a briefcase with details of Maxine Carr’s new life was stolen from a car belonging to Bettina Crossick, senior probation officer, while she was celebrating a friend's birthday in Hampstead, northwest London.

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