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MUFJ’s Securities Division Sued Over Credit Suisse’s AT1 Bond Losses.



MUFJ's Securities Division Sued Over Credit Suisse's AT1 Bond Losses.

(CTN News) – Mitsubishi UFJ Financial Group’s joint brokerage venture with Morgan Stanley is facing another lawsuit from a group of Japanese investors. This litigation is related to the losses incurred on Credit Suisse’s high-risk debt, which ultimately became worthless.

On Tuesday, a suit was filed with the Tokyo District Court by 26 plaintiffs who are seeking to recover their losses from the Additional Tier 1 (AT1) notes sold to them by Mitsubishi UFJ Morgan Stanley Securities.

The plaintiffs, represented by Yamazaki Marunouchi Law Office, are collectively seeking ¥1.73 billion ($12.2 million) in compensation.

At present, there is no immediate comment available from the company, which is jointly owned by Japan’s largest lender and a major U.S. investment bank. The complaint reveals that two of the plaintiffs are companies.

This recent lawsuit follows a previous one filed earlier this year by the same law firm on behalf of 66 different plaintiffs, seeking ¥5.2 billion in damages.

It is worth noting that Mitsubishi UFJ Morgan Stanley Securities was the most aggressive seller of these securities in Japan, accounting for approximately two-thirds of the total value of ¥140 billion.

Global bondholders suffered losses when Switzerland’s regulator devalued $17 billion of Credit Suisse’s AT1 notes during its rescue by UBS Group, leading to legal action worldwide.

In Japan, investors have filed lawsuits against SBI Holdings, Rakuten Group, and Monex Group. Matthew J. Wilson, President and Dean of Temple University, Japan Campus, noted the rarity of Japanese investors losing their entire investment due to a foreign government’s actions.

The main issue in Tokyo is whether sellers followed know-your-customer rules and adequately informed buyers about the risks, including potential triggers for devaluation.

The latest plaintiffs claim Mitsubishi UFJ Morgan Stanley Securities violated the suitability principle by selling the bonds to regular investors instead of professional institutions.

They argue that the firm failed to provide sufficient explanations for investors to assess viability events. Mitsubishi UFJ Morgan Stanley Securities has stated that it fulfilled its responsibilities in handling the sales.


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