TOKYO (Reuters) - A joint venture of Mitsubishi UFJ Financial Group Inc (8306.T) and Morgan Stanley (MS.N) has been dropped as manager for bond issuances for three firms following an instance of market manipulation, sources told Thomson Reuters DealWatch on Monday.
Mitsubishi UFJ Morgan Stanley Securities Co Ltd had been co-lead manager for a total of 130 billion yen ($1.17 billion) worth of bond issuances by Toray Industries Inc (3402.T) and KDDI Corp (9433.T). It was also managing the issuance of around 30 billion yen worth of bonds for Tokyo Gas Co (9531.T).
A person with direct knowledge of one of the issuances said liaison banks on Monday told potential investors that the brokerage was no longer involved with the issuance following a reprimand by Japan’s securities regulator, DealWatch reported.
A spokesman at Mitsubishi UFJ Morgan Stanley said the brokerage had no comment on clients’ actions.
“We accept client decisions and will make every effort to regain trust,” the spokesman said.
The Securities and Exchange Surveillance Commission on Friday recommended the Financial Services Agency fine the brokerage around $2 million, saying one of its dealers placed both buy and sell orders in August for a 10-year Japanese government bond futures contract without intention to execute.
The dealer aimed to create the impression of strong interest for the contract and the brokerage gained 1.58 million yen from related transactions, the watchdog said.
The Mitsubishi UFJ Morgan Stanley spokesman said the brokerage acknowledged the findings.
Toray, KDDI and Tokyo Gas told Reuters Mitsubishi UFJ Morgan Stanley was no longer managing their bond issuances. They declined to comment on reasons.
(This version of the story has been refiled to correct attribution in the first paragraph)
Reporting by Yasunori Fukui of Dealwatch; Writing by Naomi Tajitsu; Editing by Christopher Cushing