MUFG unit sued by more investors on Credit Suisse AT1 losses

A Tokyo court recently ruled against Mitsubishi UFJ Morgan Stanley Securities in a damages case involving an individual investor who lost his investment in Credit Suisse’s Additional Tier 1 (AT1) bonds during the Swiss bank’s 2023 rescue deal. The court acknowledged the plaintiff’s argument that the brokerage’s sales representative failed to adequately disclose the risks associated with the AT1 bonds, including the possibility of a write-down during a “viability event”. This decision adds to a series of lawsuits filed against the firm by Japanese investors, with a new case involving 14 plaintiffs seeking 1.37 billion yen in compensation for similar losses.

The lawsuits center on whether the brokerage adhered to suitability principles by selling complex AT1 bonds to retail and non-professional investors. Critics argue that while marketing materials mentioned write-down clauses, they lacked sufficient explanations of risks tied to regulatory interventions, such as the Swiss government’s decision to wipe out $17 billion of Credit Suisse’s AT1 debt. Mitsubishi UFJ Morgan Stanley Securities has defended its practices, stating it targeted clients with “adequate investing knowledge and experience”.

To date, 106 plaintiffs—primarily individual investors—are pursuing claims totaling 8.3 billion yen against the firm through the Yamazaki Marunouchi Law Office, reflecting broader dissatisfaction with how AT1 bonds were marketed in Japan. The firm sold approximately two-thirds of the 140 billion yen in Credit Suisse AT1 bonds purchased by Japanese investors, making it a central figure in the ongoing legal and regulatory scrutiny.