More investors in Japan are suing Mitsubishi UFJ Financial Group¡¯s brokerage unit more than a year after Credit Suisse¡¯s riskiest bonds that were sold to its clients turned worthless.
A lawsuit representing 14 plaintiffs was submitted to the Tokyo District Court on Friday, seeking to recover losses from so-called Additional Tier 1 notes that they bought from Mitsubishi UFJ Morgan Stanley Securities. They are demanding a combined ?1.37 billion ($8.5 million) in compensation, according to the filing led by Yamazaki Marunouchi Law Office.
A representative of the securities firm, a joint venture between Japan¡¯s largest lender and the major U.S. investment bank, said it was unable to comment because it hadn¡¯t seen the complaint.
The move marks the third group litigation filed by the same law firm against the brokerage, and reflects how angst across the world still simmers after $17 billion worth of the notes were wiped out in the March 2023 state-led rescue of Credit Suisse. Some investors recently sued the Swiss government in New York, while hedge fund Appaloosa has brought a case against Credit Suisse, now taken over by UBS Group.
The crux of the debate in Tokyo hinges around whether sellers met know-your-customer rules as well as adequately explained to buyers the risks associated with the debt, including so-called viability events that would trigger a write-down.
The latest lawsuit alleged the brokerage sold the bonds to the 14 ¡°regular¡± investors, which includes two companies, even though the products are for professional institutions, hence violating a suitability principle. While the firm mentioned a write-down clause in its marketing materials, this fell short of offering extra explanations needed for investors to understand the debt, according to the complaint.
Mitsubishi UFJ Morgan Stanley Securities has pushed back against the previous suits, saying it sold the securities to those in the wealth segment with adequate investing knowledge and experience, according to documents seen by Bloomberg News.
A total of 106 plaintiffs, mostly individuals, are now participating in Yamazaki Marunouchi Law Office¡¯s cases against Mitsubishi UFJ Morgan Stanley Securities seeking a combined ?8.3 billion. The brokerage sold the bulk of roughly ?140 billion worth of Credit Suisse¡¯s debt that was bought by Japan investors.
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