Mitsubishi UFJ Financial Group’s Japanese brokerage joint venture with Morgan Stanley has been sued over the sale of Credit Suisse’s Additional Tier 1 notes.
Mitsubishi UFJ Morgan Stanley Securities Co. is being sued over the sale of Credit Suisse’s AT1 bonds, according to a «Bloomberg» report citing a court filing in Tokyo led by Yamazaki Marunouchi Law Office. The lawsuit was filed on behalf of 66 plaintiffs who demanded 5.2 billion yen ($36 million) in compensation for the losses.
The plaintiffs, who say their AT1 investments had a total nominal value of $41 million, claim that the joint venture violated suitability rules by selling the bonds to regulator investors, despite being intended for professional institutions. They also allege that no sufficient explanations about risks were provided, including conditions that could trigger a write-down.
In total, investors throughout Japan bought around 140 billion yen in Credit Suisse's AT1 bonds, according to the Financial Services Agency, with the MUFG joint venture accounting for the majority. Separately, Tokyo-based Monex was sued in July by an investor who claimed that the online brokerage also did not provide sufficient explanation about risks associated with the AT1 bonds.
